[La Deok-yeon Gate] Corporate Closure Amid Growing Stock Manipulation and Money Laundering Suspicions

Byun Mo, close aide of Ra Deok-yeon, reported closure of Japanese restaurant in Cheongdam-dong one week before arrest
Cable TV channel suspends operations, online news site also shuts down

It has been confirmed that a close associate of CEO Ra Deok-yeon of Hoan, who is accused of stock price manipulation related to the crash triggered by Soci?t? G?n?rale (SG) Securities, closed a corporation suspected of being a 'fund reservoir' before being arrested.

According to the National Tax Service's business registration status on the 15th, 'The W,' located in Cheongdam-dong, Gangnam-gu, Seoul, reported its closure on the 3rd. The business purposes of The W include a Japanese restaurant and liquor sales. There are traces of restaurant operations at the address, but the contact number on the signboard is currently inactive.

‘The W’ in Cheongdam-dong, Gangnam-gu, Seoul, which was reported closed on the 3rd. Photo by Jang Hyowon

The W is a corporation established in June last year with a capital of 40 million KRW. The CEO is Mr. Byeon, a close aide of CEO Ra Deok-yeon. Currently, Mr. Byeon is the sole inside director of The W.

Mr. Byeon was the key figure managing Hoan, a core corporation engaged in unregistered investment consulting business, and led the recruitment of doctors and high-net-worth investors. The prosecution arrested CEO Ra on the 10th, along with Mr. Byeon and professional golfer Mr. Ahn. All were detained on the 11th.

CEO Ra Deok-yeon's stock price manipulation suspicions were triggered on the 24th of last month when eight stocks, including Daesung Holdings, Seongwang, Samchully, and Dow Data, simultaneously hit their lower price limits. At that time, a large volume of sell orders poured through the SG Securities counter, a foreign securities firm, shocking the stock market. These were forced liquidation orders from contracts for difference (CFD) used by CEO Ra and others.

After this incident, it was revealed that CEO Ra and others raised about 1 trillion KRW in investment funds from high-net-worth investors and managed the funds. CEO Ra, who does not have an investment discretionary license, is accused of illegally receiving customer funds, mobile phones, and identification cards, and fabricating transactions as if individuals were investing. They are also accused of engaging in wash trading, where stocks are bought and sold at predetermined prices. Wash trading is a violation of the Capital Markets Act.

Furthermore, CEO Ra and associates are known to have received investment profit commissions through corporations established by Ra and his close aides. They operated golf practice ranges, sold expensive memberships to members, or sold paintings at high prices in galleries. The industry views that there are more than 20 such disguised corporations serving as 'fund reservoirs.' CEO Ra is also facing charges of tax evasion and other offenses.

The W is also presumed to be one of these fund reservoirs. According to a previous media report, CEO Ra and others operated a malatang restaurant and engaged in 'card kkang' by charging hundreds of thousands of won to investors' cards under the pretext of dinner expenses. It is presumed that the upscale Japanese restaurant The W was operated in a similar manner.

The industry believes that CEO Ra's side is closing or suspending operations of corporations to conceal the flow of money in these fund reservoirs. In fact, other suspected money laundering channels such as cable TV channels and internet media outlets have currently shut down their sites and ceased operations. The cable channel was actively recruiting staff until early this year but reportedly stopped operations around the time the incident occurred. A stock market official said, "The highest priority should be to identify the hidden fund flows of CEO Ra and others and prevent the outflow of funds."

※This SG Securities-triggered stock price crash has sounded an alarm for the capital market order. Readers' tips will be a great help in uncovering the truth. We welcome any reports regarding investment damage cases, suspicions of stock price manipulation and asset concealment by Ra Deok-yeon's side, details about the large-scale sales by major shareholders of Dow Data and Seoul Gas, or any other related information (jebo1@asiae.co.kr). Asia Economy will do its best to establish a transparent capital market order.

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