A Brentwood investment manager has filed for Chapter 7 bankruptcy amid signs of a federal investigation.
Michael Jinyong Park asked a Middle Tennessee bankruptcy court to liquidate his assets Tuesday. In a letter to investors dated June 30, Park said "compliance officers" had closed down his firm, Park Capital Management Group, and frozen the firm's holdings.
A Securities and Exchange Commission spokesman could find no record Thursday of an enforcement action having been taken against Park, but people involved in the case said SEC agents had contacted them in recent days.
Park hung up the phone when contacted at his home by a reporter Thursday, and his attorney did not return a call seeking comment. The office of Park Capital Management was locked, and a sign next to the front door had been removed.
In his letter to clients, Park said he would explain the situation in further detail in the future.
"I will do everything possible to make this right," he said. "I want you to know that it was not my intention nor did I ever think that things would come to this end."
Claims could be in millionsThe bankruptcy filing and investigation appear to have put an abrupt end to Park's 7-year-old firm, which purported to invest its clients' money through a Florida brokerage house called 1st Discount Brokerage Inc.
Operating out of an office on Centerview Drive in Brentwood, Park recruited investors through upscale establishments such as the Governor's Club and The Palm restaurant.
Samuel K. Crocker, the bankruptcy trustee appointed to handle the case, estimated that claims against Park could be in the millions.
An early sign of trouble emerged in March 2007, when an investor, Jean M. Latreille, of Franklin, filed a suit against Park and 1st Discount Brokerage claiming the two had made unauthorized trades on her account.
The suit also said Park had been dismissed from his previous employer, Raymond James, for signing a client's name without his consent, and that he had been fined by securities regulators in Virginia and rejected in Ohio for past practices.
Latreille asked for $480,000 in damages. The case was settled in June 2007.
In recent weeks, other investors began questioning the safety of their accounts. Woody Siriyutwatana of Nashville said he first demanded information about his account about a month ago.
He was sent a statement, but otherwise Park did not respond.
"He just disappeared," Siriyutwatana said.
A key question in the bankruptcy will be the name in which Park's assets are held, said Will Cheek III, an attorney with Bone McAllester Norton who is representing four creditors.
In his bankruptcy petition, Park listed assets of less than $50,000, but property records show that he and his wife have two homes in Brentwood, including a house on Woodward Hills Place that they bought in November for $1.76 million.
In addition, Park said in his letter that while investments held through his firm are frozen, those with 1st Discount Brokerage, as well as any annuities or mutual funds, remain liquid.
That suggests that some investors could be able to get all of their money back, while others could face substantial losses, Cheek said.
"That's going to be the big question," he said.
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