False Disclosure of 'Entry into Renewable Energy'... Luring Investors with 20 Billion Won in Fake Tax Invoices

National Tax Service Launches Second Round of Stock Market Tax Investigations
31 Companies Targeted for Stock Manipulation, Tunneling, and Illegal Investment Advisory Chat Rooms

The stock manipulation group known as 'Gap' acquired Company A, a manufacturer listed on the domestic stock market, and then issued favorable disclosures such as announcing entry into the renewable energy business. To create the appearance of entering a new business sector, Gap engaged in deceptive practices such as exchanging fake tax invoices worth over 20 billion won without any real transactions and transferring 30 billion won to a local subsidiary whose business activities were unclear, in order to lure retail investors. As the stock price subsequently rose, multiple speculators earned massive profits through convertible bonds, and the resulting surge in share supply led to significant losses for small investors. The National Tax Service plans to conduct a rigorous investigation into the use of fabricated tax invoices intended to release false favorable information, as well as abnormal outflows of funds from listed companies through local subsidiaries.

Anduksoo, Director of the Investigation Bureau of the National Tax Service, explained the background of the second tax investigation of 'unfair stock market tax evaders' on the 6th at the Government Complex Sejong. National Tax Service

On the 6th, the National Tax Service announced that it has launched tax investigations into a total of 31 companies involved in stock manipulation, tunneling (asset and profit diversion), and illegal investment advisory chat rooms. This is the second tax investigation into the stock market, following the first conducted in July last year.

The first round of investigations targeted stock manipulation companies that inflated their stock prices by spreading false information and exaggerating their financial figures, then offloaded their shares onto minority shareholders in the market. These firms lured general investors by falsely promoting entry into new businesses or upcoming listings, and then sold previously purchased shares using paper companies and borrowed-name accounts, concealing capital gains and evading taxes.

One company inflated its sales by accepting fabricated tax invoices and recorded fictitious costs through accounting fraud. Through this, it transferred a high-value company-owned residence to its CEO free of charge and siphoned off billions of won under the guise of loans.

Another company, despite achieving good business performance, deliberately failed to submit materials during accounting audits, resulting in a disclaimer of opinion and delisting. Ahead of delisting, it transferred company manufacturing technologies and other assets to a holding company controlled by the owner family without compensation, sharing corporate profits, which led to severe losses for minority shareholders due to falling stock prices and trading suspension.

Among the companies under investigation, more than half of the listed firms have had their stock trading suspended due to disclaimers of opinion by external auditors, and some stock prices have plummeted to one-tenth of their previous levels.

Stock Manipulation Cases Also. National Tax Service

So-called 'tunneling' companies—those that created channels within corporate transaction structures to siphon off assets and profits to the owner family—as well as the owner families themselves, are also subjects of this tax investigation. These parties treated listed companies as if they were private entities, directly extracting corporate profits or cleverly inserting themselves into the supply chain to collect so-called 'toll fees.' According to the National Tax Service, these individuals had the corporation purchase luxury audio equipment and pet supplies for the owner’s use and even paid the owner’s personal legal fees on behalf of the company.

In particular, one company invested hundreds of billions of won in a fund operated by an acquaintance of the owner with no investment experience, and then used the fund to acquire convertible bonds from an insolvent company controlled by the owner, thereby improperly diverting corporate funds.

The National Tax Service also plans to investigate illegal investment advisory chat room operators who induced expensive membership fees and earned tens of billions of won in revenue while evading taxes through false expense claims and fake tax invoices. These operators gained notoriety through media such as YouTube and approached financially vulnerable groups—including young adults with little investment experience and seniors—using provocative phrases like 'recommended stock to soar 300%' or 'guaranteed 100% profit in three days' to pressure people into joining. Before releasing their stock recommendations, they accumulated shares themselves, and as the price rose, they used their members as so-called 'liquidity absorbers' to secure unfair profits.

Andeoksoo, Commissioner of the National Tax Service Investigation Bureau, stated, "We will thoroughly verify and tax not only market-disrupting activities by the companies under investigation but also all related parties and transactions involved. If evidence of destruction of evidence or asset concealment, or other violations under the Tax Offenders Punishment Act, is found during the investigation, we will refer these cases to investigative authorities to ensure criminal prosecution."

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