"Promising to Take Company Public" Scam Leads to Large Fraud... Consulting Firm CEOs Sentenced to Prison

The representatives of an M&A consulting firm who were prosecuted on charges of fraud and other offenses for receiving large sums of money from owners of unlisted companies under the pretense of "taking their companies public" have been sentenced to prison.

According to the legal community on the 8th, the Criminal Division 22 of the Seoul Central District Court (Presiding Judge Lee Jun-cheol) recently sentenced Kim (50) and Baek (63), co-representatives of consulting firm A, to five years and three years and six months in prison, respectively. An employee, Son (39), who was also indicted, was sentenced to three years in prison.

Kim and Baek were charged with approaching packaging manufacturer B in 2017, claiming they would take the company public on the stock market while guaranteeing management rights, and embezzling 300,000 unlisted shares and 270 million won in cash. It was investigated that they deceived B by saying they would achieve a backdoor listing by acquiring an entertainment company listed on KOSDAQ.

Kim is also accused of pledging the acquired B shares as collateral to other investors and receiving 1.3 billion won transferred to A’s account. Kim brought employee Son along, who pretended to be a B employee and deceived investors by saying, "Calculate at 6,500 won per share and lend money. The company will be listed in 1-2 years, and once listed, you can resell at 7,500 won per share." Baek deceived investors by claiming, "We agreed to acquire shares and management rights of a medical device company listed on KOSDAQ. We will give you two of the five internal director seats," and embezzled 1 billion won. During the trial, Kim argued, "I tried to actually acquire the entertainment company but failed, and I did not deceive B." Baek shifted responsibility, saying, "I delegated specific tasks to Kim and was not involved." Son also claimed, "I just followed orders as an employee."

The first trial court found most of the charges guilty. The court stated, "It is true that Kim attempted to acquire the entertainment company, but the acquisition had already fallen through by the end of 2017. Nevertheless, he received B’s shares and deceived others into believing the acquisition negotiations were ongoing," and "Baek was deeply involved in the crime by setting the par value to facilitate share disposal when contracting with B."

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