Prosecutors Indict 20 for Stock Manipulation of EdisonEV and Diarc... 45.3 Billion KRW Asset Seizure Ordered (Comprehensive)

June 6 Seoul Southern District Prosecutors' Office Briefing
10 More Indicted, Total 20 Prosecuted

The prosecution has indicted an additional 10 individuals involved in stock price manipulation of KOSDAQ-listed companies EdisonEV and Diarc, bringing the total number of defendants to 20. Assets worth approximately 45.3 billion KRW have also been seized and preserved.

The Seoul Southern District Prosecutors' Office Joint Investigation Team for Financial and Securities Crimes (Chief Prosecutor Dan Seonghan) announced on the 6th that it has indicted a total of 20 people from July 26 of last year to the present, including 10 additional indictments for involvement in stock price manipulation of EdisonEV and Company A. Among them, 12 were indicted while in custody, and seizure and preservation measures were taken on assets worth approximately 45.3 billion KRW.

The prosecution indicted 13 people in connection with the "EdisonEV stock price manipulation case." According to the prosecution, Kang Young-kwon, chairman of Edison Motors (63), and 12 others are accused of violating the Capital Markets Act by fabricating the acquisition of Ssangyong Motor and large-scale fundraising from May 2021 to March of last year to manipulate stock prices, causing damages worth approximately 700 billion KRW to about 125,000 small investors and obtaining illicit gains of 162.1 billion KRW.

Kang and seven others are also charged with obstructing the bidding process by using the acquisition of Ssangyong Motor, a national key industry, as a tool for stock price manipulation, creating the appearance of capital circulation through fictitious capital contributions, and submitting false financial evidence during the bidding process.

The prosecution stated that this case was orchestrated by a collusion between the management faction, including Kang who gained fame through appearances on entertainment broadcasts, and stock price manipulation groups seeking to exploit them.

The stock price manipulation groups acquired shares through a "split investment association" method (an acquisition method using multiple investment associations) to exit quickly. This method allows them to evade major shareholder lock-up and stock trading disclosure obligations. They also pretended to legally attract investment funds by using professional asset management companies. The management faction deceived general investors by creating fictitious transactions to inflate sales and issuing false announcements of a turnaround to profitability related to EdisonEV.

Mr. Lee (52) and others targeted small market cap and undervalued listed companies as 'Shells' and attached favorable factors for stock price boosting as 'Pearls' to pursue large-scale capital gains. / Photo by Seoul Southern District Prosecutors' Office

Regarding another stock price manipulation case, the "Diarc stock price manipulation case," the prosecution has indicted a total of nine people. Lee (52) and others are accused of manipulating Diarc's stock price through false disclosures related to the development of an ovarian cancer treatment bio-business around April 2020, causing damage to about 6,800 small investors and obtaining illicit gains of approximately 9.2 billion KRW. Two of them are also part of the stock price manipulation group involved in the EdisonEV case.

Notably, Lee, known as the "number one domestic stock price manipulator," continued to commit similar stock price manipulation crimes even after the disbandment of the Joint Investigation Team halted direct prosecution by the prosecutors, and while trials for similar cases were ongoing. As a certified public accountant, Lee has acquired multiple listed companies since September 2012. Believing himself to be a "sanctuary" immune from criminal punishment, he gathered funds from financiers (jeonju) and conducted a series of corporate raids.

The prosecution confirmed that certified public accountants belonging to accounting firms that issued bio-asset valuation reports did not perform evaluation services and instead prepared reports containing false information, receiving high fees for these services. Three certified public accountants received requests from Lee to issue false valuation reports or to conduct audits favorably, violating the Certified Public Accountant Act.

A prosecution official said, "Lee, who previously operated an accounting firm, acted in an organized manner linked to the corporation he established when he urgently needed to manipulate, which seems to have involved many accountants in the crime."

After the stock price manipulation group led by Lee failed to exit due to Diarc's refusal of audit opinion, they used deception during the transfer of bio-assets to the K-OTC market and consecutively acquired multiple KOSDAQ-listed companies through essentially no-capital M&A methods.

A prosecution official stated, "We will continue to make efforts so that the principle of 'even a single stock price manipulation can ruin a family' is established in the capital market through strict investigation of financial and securities crimes and thorough recovery of criminal proceeds."

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