"Stock Demand and Fund Circulation Scheme"... Former Vice Chairman of Financial Supervisory Service Sentenced to Prison

The court sentenced a former Financial Supervisory Service (FSS) deputy governor, who served time for embezzlement and breach of trust during the acquisition process of a KOSDAQ-listed company, to a suspended prison term in the first trial on charges of fraud.

According to the legal community on the 3rd, the Seoul Southern District Court Criminal Division 12 (Chief Judge Dang Woojeung) on the 19th sentenced former FSS deputy governor Park Mo (70) and former securities firm branch manager Jeong Mo (67), who were indicted on fraud charges under the Act on the Aggravated Punishment of Specific Economic Crimes, to three years in prison with a five-year suspension.

Park and Jeong are accused of deceiving other investors to secure cash to pay investors, embezzling 1.77 billion won. In 2016, the two established investment association B to acquire A, a display company listed on KOSDAQ. After acquiring A, investors demanded that the two give them A’s shares proportional to their stakes, but they did not actually hold the shares due to reasons such as acquisition financing and stock-secured loans.

To secure cash to pay investors demanding withdrawal and to prevent the departure of A’s shares, the two deceived victims by saying, "If you invest in association B, you can acquire A’s shares," and embezzled a total of about 1.7 billion won. However, it was found that association B also lacked the ability to transfer about 50,000 shares promised to the victims.

The court pointed out, "Despite knowing that it was difficult to deliver the shares, they deceived the victims into acquiring shares of association B," adding, "Considering the nature of the fraud and the amount of damage, the crime is serious and they have not been forgiven by the victims."

Previously, Park and others were sentenced to five years in prison and fined 14 billion won in the first trial at the Seoul Southern District Court in 2019 on charges of embezzlement, breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and violation of the Capital Markets Act during the no-capital acquisition of A. The sentence was reduced to four years in prison and a 3.5 billion won fine in the second trial, and the original judgment was confirmed by the Supreme Court in July 2021.

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