Financial Crime 'Issue Black Hole' Seoul Southern District Prosecutors' Office... Ra Deok-yeon, Kim Nam-guk, Terra·Luna One After Another

After the Revival of the Current Government's Joint Investigation Unit, 'Yeouido Grim Reaper' Regains Its Prestige
Prosecutors Say "A Promotion Opportunity to Demonstrate Ability," Investigators Say "Avoided Due to Increased Workload"

"The Seoul Southern District Prosecutors' Office is the guardian of the market economy order, the vanguard fighting on the front lines against criminals who undermine the capital market. Please call us guardian angels, not the Grim Reaper of Yeouido."

This was said by Prosecutor General Lee Won-seok during his visit to the Seoul Southern District Prosecutors' Office on September 27 last year. The Southern District Prosecutors' Office is specialized in investigating financial and securities crimes and is nicknamed the "Grim Reaper of Yeouido." Recently, it has gained more attention as it took charge of major financial crime investigations such as the "SG Securities stock price crash incident" and the "Terra-Luna incident." Additionally, anti-corruption cases like the recent "Assemblyman Kim Nam-guk's 6 billion won coin holding suspicion" have gathered here, earning it the nickname "issue black hole" for financial cases.

[Image source=Yonhap News]

The reason the Seoul Southern District Prosecutors' Office has become the "issue black hole" for financial crimes is that the Joint Financial and Securities Crime Investigation Unit (Joint Investigation Unit) of the prosecution is located here. The Joint Investigation Unit was originally established in 2013 at the Seoul Central District Prosecutors' Office during the Park Geun-hye administration to eradicate unfair trading. However, in February 2014, the prosecution moved the unit to the Southern District Prosecutors' Office, which has jurisdiction over the Yeouido securities district, to develop it as a "specialized prosecution office for financial and securities investigations."

The following year, the prosecution designated the Southern District Prosecutors' Office as a key prosecution office for financial crimes and transferred the Financial Tax Investigation Divisions 1 and 2 from the Seoul Central District Prosecutors' Office to the Southern District Prosecutors' Office. At the same time, they established the position of the Second Deputy Chief Prosecutor to oversee and command financial crime investigations, thus forming a specialized team for financial and securities crime investigations.

All major financial and securities crimes that recently shook the public have been investigated by the Southern District Prosecutors' Office. The Financial Investigation Division 1 (Chief Prosecutor Lee Seung-hyung) investigated the "Coinone case," where bribes were exchanged for coin listings, resulting in the arrest and indictment of executives and brokers. The Financial Investigation Division 2 (Chief Prosecutor Chae Hee-man) arrested and indicted Kang Jong-hyun, suspected of being the real owner of Bithumb, and related company executives, continuing the investigation. In 2015, Financial Investigation Division 1 prosecuted Lee Cheol, CEO of Value Invest Korea (VIK), and his management for a 700 billion won financial fraud, while Financial Investigation Division 2 investigated and indicted those involved in the Samsung Techwin and Hanmi Pharmaceutical cases for stock price gains using undisclosed information. The Joint Investigation Unit prosecuted Lee Hee-jin and his group, known as the "Cheongdam-dong stock rich," for illegal stock trading worth 160 billion won in 2016.

Prosecutor General Kim Oh-soo and others are unveiling the plaque at the launch ceremony of the Financial and Securities Crime Investigation Cooperation Group held on September 1, 2021, at the Seoul Southern District Prosecutors' Office in Mapo-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

The prestige of the Southern District Prosecutors' Office as the "Grim Reaper of Yeouido" shrank when then Minister of Justice Choo Mi-ae disbanded the Joint Investigation Unit in January 2020 but was revived when the current administration reinstated the unit. Currently, the Joint Investigation Unit (headed by Dan Sung-han) handed over 10 suspects, including Shin Hyun-sung, former CEO of Chai Corporation and the main culprit in the "Terra-Luna incident," to trial last month. The Terra-Luna incident affected 280,000 domestic victims alone, with a market capitalization evaporating by 450 trillion won in just one week. Investors initially considered filing complaints with either the Southern District Prosecutors' Office or the Seoul Metropolitan Police Agency's Financial Crime Investigation Unit but chose the newly reopened Joint Investigation Unit, expressing high expectations.

Alongside this, nine people, including Kim Yong-bin, chairman of Daewoo Shipbuilding & Marine Engineering Construction, accused of embezzlement and breach of trust, were also sent to trial. The ongoing "SG Securities stock price crash incident" is also under the Joint Investigation Unit's jurisdiction.

Financial-related cases at the Southern District Prosecutors' Office are overseen by Second Deputy Chief Prosecutor Heo Jeong. The Public Anti-Corruption and Narcotics Division (Criminal Division 6), which he commands, is handling the "virtual currency investment suspicion" case involving Assemblyman Kim Nam-guk of the Democratic Party.

Second Deputy Chief Prosecutor Heo Jeong is widely recognized as a "special investigation expert." He has served as head of the Gwangju District Prosecutors' Office Special Investigation Division, head of the Special Investigation Division 3 and Anti-Corruption Investigation Division 3 at the Seoul Central District Prosecutors' Office. Under Heo's command, Dan Sung-han, head of the Joint Investigation Unit, worked on the special investigation team for the National Intelligence Service's election interference case in 2012 and summoned former Supreme Court Chief Justice Yang Sung-tae for investigation over allegations of abuse of judicial administrative authority.

With financial cases attracting attention from the prosecution's top leadership, political circles, and the entire nation, prosecutors prefer assignments at the Southern District Prosecutors' Office as it greatly benefits their careers. Many prosecutors who served as heads of the Southern District Prosecutors' Office have been promoted to chief prosecutors of the Seoul Central District Prosecutors' Office or high prosecutors' offices.

On the other hand, among prosecution investigators, the Southern District Prosecutors' Office is reportedly considered an undesirable office. Given that the credit for investigations tends to go to prosecutors, there is little incentive to prefer the Southern District Prosecutors' Office, which involves heavy workloads. However, according to legal circles, investigators aiming for special promotions based on investigative achievements rather than general promotions through exams tend to prefer the Southern District Prosecutors' Office, where it is easier to gain experience in special investigations.

Recently, the formal establishment of the Joint Investigation Unit was decided, and financial and securities crime investigations at the Seoul Southern District Prosecutors' Office are expected to expand further. On the 4th, the Ministry of the Interior and Safety announced a legislative notice for the "Partial Amendment to the Regulations on the Organization of Prosecutors' Offices," establishing the Joint Financial and Securities Crime Investigation Division and the Financial and Securities Crime Investigation Department, and increasing the number of personnel by one for the head of the investigation department position.

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