[Exclusive] Where Did the 30 Billion Go... On the Day the CEO Was Indicted, a 10 Billion Loss Led to a Quick Building Sale

On the same day that CEO Lee of Huestem Korea, suspected of a trillion-won-scale multi-level marketing fraud, was indicted and detained for violating the Door-to-Door Sales Act, a corporate-owned building worth approximately 43.5 billion won was sold for 33.7 billion won. Attention is focused on the background of the urgent disposal of the building at a loss of nearly 10 billion won compared to the market price.

A building located in Samseong-dong, Gangnam-gu, Seoul, purchased by LSE Investment, a subsidiary of Huestem Korea, for 43.5 billion KRW in June last year. This building was sold for 33.7 billion KRW in January this year.
[Photo by Lee Ji-eun]

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According to a comprehensive report by Asia Economy on the 9th, 'LSE Investment,' where CEO Lee was the sole inside director, sold a four-story building located in Samseong-dong, Gangnam-gu, Seoul, owned by the corporation, for 33.75 billion won on January 9th, the same day the Seoul Central District Prosecutors' Office Criminal Division 4 indicted CEO Lee. According to the building and corporate registry, the corporation purchased the building for 43.5 billion won on June 21st last year. This means it was disposed of at a loss of 9.75 billion won within half a year of purchase.

LSE Investment is one of the affiliates of Huestem Korea. It is known that Huestem Korea lent over 40 billion won to LSE Investment last year for the purpose of purchasing the building.

A representative from a law firm in charge of Huestem Korea's asset trust stated, "When purchasing the Samseong-dong building last year, 41.8 billion won was transferred to LSE Investment's corporate account in the name of Huestem Korea," adding, "Although the name is LSE Investment, the building belongs to Huestem Korea." CEO Lee resigned as an inside director of LSE Investment on the 29th of last month, and currently, his legal representative, Mr. A, has taken over as inside director.

The problem lies in the whereabouts of the sale proceeds. CEO Lee's side claims that he never instructed the sale of the building, and the sale funds were transferred to several unidentified corporations, making it impossible to verify the use of the funds. According to CEO Lee's side, the remaining balance in LSE Investment's corporate account is 91 million won.

Seoul Central District Prosecutors' Office, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

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According to the sales proceeds execution details disclosed by CEO Lee's legal representative Mr. A, out of the total sale proceeds of 34.036 billion won, 330 million won was transferred as real estate brokerage fees, 3.01 billion won to the law firm in charge of Huestem Korea's asset trust, and 55 million won for legal advisory fees. Additionally, 2.65 billion won and 14.9 billion won were transferred under the names of real estate consulting and real estate development, respectively.

However, CEO Lee's side maintains that except for the legal advisory fees and real estate brokerage fees, the amounts were transferred to third-party corporations of unknown identity, making it difficult to trace the use of the funds.

Mr. A said, "(The sale of the Samseong-dong building) happened without CEO Lee's knowledge," adding, "The real estate contract was concluded without CEO Lee's consent, and no power of attorney was given to any third party." He continued, "The corporations to which the funds were transferred are not affiliates and are all unknown corporations," and said, "We have currently filed a complaint against the seller."

On the other hand, a representative from the law firm in charge of Huestem Korea's asset trust stated, "CEO Lee instructed the sale to the seller through a power of attorney," adding, "Currently, the sale proceeds are held by a third-party corporation in preparation for seizure. The sale funds will be recovered into a trust account and used to return the investment funds to the victims."

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