Court Sentences Optimus CEO Kim Jaehyun to 40 Years in Prison in Appeal Trial... Significantly Increases Sentences for Related Parties (Comprehensive)

Office of Optimus Asset Management, Gangnam-gu, Seoul.
[Photo by Yonhap News]

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] Kim Jae-hyun, CEO of Optimus Asset Management (Optimus), who was indicted on charges of fund fraud involving over 1 trillion won, was sentenced to 40 years in prison in the appellate court. This sentence is significantly harsher than the 25 years handed down in the first trial. Other Optimus officials indicted alongside him also received substantially increased sentences in the appeal.

The Seoul High Court Criminal Division 5 (Presiding Judges Yoon Kang-yeol, Park Jae-young, Kim Sang-chul) overturned the first trial’s sentence of 25 years imprisonment for Kim, who was charged with fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, and sentenced him to 40 years in prison on the 18th. The fine of 500 million won and the confiscation amount of 75.175 billion won were maintained as in the first trial.

The court sentenced Lee Dong-yeol (47), the second-largest shareholder of Optimus, to 20 years in prison and a fine of 500 million won, and director Yoon Seok-ho (45) to 15 years in prison and a fine of 300 million won. In the first trial, Lee and Yoon were sentenced to 8 years in prison with a 300 million won fine and a 200 million won fine, respectively. The confiscation order of 5.175 billion won against Lee was upheld as in the first trial.

The reason for the significant increase in sentences for Kim and Lee is that some of the conspiracy charges against them, which were acquitted in the first trial, were overturned in the appeal.

The court explained the sentencing rationale, stating, "Some charges that were judged not guilty in the first trial against defendants Kim Jae-hyun and Lee Dong-yeol were found guilty, and although the verdict for defendant Yoon Seok-ho was maintained, the original sentence was deemed excessively lenient and unfair."

The court pointed out, "This case involves an enormous financial fraud where the defendants operated a private equity fund for over three years, deceiving victims by claiming to invest in public institution accounts receivable and embezzling approximately 1.3 trillion won. Professionals such as securities experts exploited their positions to commit highly sophisticated crimes."

Furthermore, the court emphasized, "When the fund became unsellable, the defendants attempted to destroy evidence and discussed response strategies by dividing tasks among the Financial Supervisory Service, prosecution, and courts, causing significant confusion in the initial investigation. They inflicted enormous financial and psychological damage on numerous innocent victims and severely undermined the trust and transparency of the financial market, causing great social harm."

It added, "It is necessary to impose a heavy sentence to isolate them from society for a long time so they live with lifelong remorse and to prevent recidivism."

Yu Hyun-kwon, advisor at Skin & Skin, who was indicted for forging and using accounts receivable transfer contracts and transfer confirmation documents during the fund fraud process, was sentenced to 17 years in prison and fined 500 million won, a heavier sentence than the first trial’s 7 years imprisonment and 300 million won fine. Song Sang-hee, an internal director at Optimus who received 3 years imprisonment and a 100 million won fine in the first trial, was sentenced to 8 years imprisonment and fined 300 million won in the appeal, increasing his sentence.

Kim and others were indicted for deceiving investors from April 2018 to June last year by claiming to invest in public institution accounts receivable, raising over 1 trillion won, then engaging in acquiring bad debts and rolling over funds.

The first trial court recognized 1.3194 trillion won of the investment funds raised by Optimus as the amount involved in the fraud.

Meanwhile, Kim was also indicted for embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes, accused of conspiring with former Haeduck Powerway CEO Park to withdraw 5 billion won of paid-in capital from Hwaseong Industrial, the largest shareholder of Haeduck Powerway, and arbitrarily using it for Optimus fund redemptions. He was sentenced to 5 years in prison by the court in December last year.

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