Prosecution Indicts Former Kolon Chairman Lee Woong-yeol Without Detention... Applies 7 Charges Related to 'Invossa'

Former Kolon Group Chairman Lee Woong-yeol appeared at the Seoul Central District Court in Seocho-dong, Seoul, on the 30th of last month for a warrant hearing. [Image source=Yonhap News]

[Asia Economy Reporter Choi Seok-jin] Former Kolon Group Chairman Lee Woong-yeol (64) has been indicted on charges including manipulating stock prices during the process of listing related stocks on the KOSDAQ market by falsifying the components of the osteoarthritis treatment drug Invossa-K.

The Criminal Division 2 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Chang-soo) announced on the 16th that former Chairman Lee was non-detained indicted on seven charges including violations of the Pharmaceutical Affairs Act, Capital Markets Act, Real Name Financial Transactions Act, and special cases laws on breach of trust, breach of trust mediation, fraud, and obstruction of business.

According to the prosecution, from November 2017 to March last year, former Chairman Lee is accused of manufacturing and selling Invossa with the second component being 'kidney-derived cells (GP2-293)' instead of the 'cartilage cells' approved by the Ministry of Food and Drug Safety, generating sales of 16 billion KRW.

He is also accused of hiding the fact that Kolon TissueGene, the research and development company of Invossa, received a clinical trial suspension order from the U.S. FDA in June 2016, while valuing unlisted stocks and receiving equity investments worth 10 million USD (approximately 12 billion KRW) from a state-run bank.

The prosecution applied charges of fraudulent unfair trading and market manipulation under the Capital Markets Act against former Chairman Lee, related to Kolon’s false disclosures during the KOSDAQ listing process in November 2017, where they concealed the clinical suspension and the fact that the main component of Invossa’s second component was kidney-derived cells, artificially inflating affiliate stock prices.

Additionally, the prosecution charged former Chairman Lee with breach of trust mediation for providing 10,000 stock options each free of charge to two clinical principal investigators during Invossa’s domestic clinical trials in June 2011.

The doctors, who sold the stock options and earned over 2 billion KRW each, were also non-detained indicted alongside former Chairman Lee on charges of obstructing business by failing to report to the hospital’s Institutional Review Board (IRB) and receiving breach of trust benefits.

Earlier, the prosecution indicted Kolon Life Science CEO Lee Woo-seok (63) and others on charges including violations of the Capital Markets Act related to Invossa’s false component labeling and listing fraud suspicions.

Separately, the prosecution confirmed that Kolon Life Science officials, including CEO Lee, provided hospitality worth approximately 1.7 million KRW to officials in the Ministry of Food and Drug Safety’s pharmaceutical review department as consulting fees from July 2012, and after retirement, signed consulting contracts worth about 22 million KRW, applying charges of bribery.

A prosecution official stated, “We are proceeding with international investigative cooperation to secure custody of key Kolon TissueGene suspects who are refusing to appear while staying in the U.S., and are conducting criminal judicial cooperation procedures regarding important witnesses such as U.S. researchers.”

With the prosecution’s indictment of former Chairman Lee on this day, the investigation into the Invossa suspicions, which began in early June last year and lasted over a year, has effectively concluded.

This content was produced with the assistance of AI translation services.