'Wage Arrears' Cyworld CEO Sentenced to 1 Year and 6 Months in First Trial

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Jeon Je-wan (57), CEO of Cyworld, who was prosecuted for withholding employees' wages, has been sentenced to prison.

Judge Cho Guk-in of the Seoul Eastern District Court Criminal Division 9 sentenced Jeon to 1 year and 6 months in prison on the 12th in a verdict for charges including violation of the Labor Standards Act and the Employee Retirement Benefit Security Act.

Jeon was prosecuted for withholding approximately 470 million KRW in wages and severance pay from 27 employees and embezzling about 10 million KRW in withheld health insurance premiums from three victims.

Judge Cho explained the sentencing, saying, "The amount of unpaid wages and severance pay is substantial, and the victim compensation and forgiveness have not been achieved," and "Considering the defendant's prior criminal record for embezzlement and violation of the Labor Standards Act, a prison sentence is inevitable."

However, he added, "The defendant is showing remorse and has paid part of the unpaid wages and severance pay, and it does not appear to be a malicious withholding," and "There is no risk of flight, and to allow an opportunity for further victim compensation, the court will not order detention."

After the sentencing, Jeon told reporters that the acquisition process is currently underway and expressed his intention to file an appeal.

Cyworld was established in 1999 and led the heyday of social networking services (SNS) in the mid to late 2000s with its one-person account-centered mini homepage. However, it rapidly declined as foreign SNS platforms such as Twitter and Facebook entered the domestic market. Even after Jeon acquired Cyworld in 2016, the company continued to face management difficulties, and last year issues of wage arrears for employees arose, followed by reports from former employees.

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