The Whereabouts of the Mastermind Behind Capital-Free M&A and Stock Price Manipulation Remain Unknown for Over a Year
[Asia Economy Reporter Yoo Byung-don] A corporate raider involved in no-capital mergers and acquisitions (M&A) and stock price manipulation related to the Lime Asset Management scandal has been brought to trial.
The Criminal Division 6 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Kim Rak-hyun) announced on the 9th that Jo was arrested and indicted last month on charges including violation of the Capital Markets Act.
According to the prosecution, Jo is accused of manipulating stock prices through false disclosures at Esmo, where Lime funds were invested. He acquired Esmo by establishing Route One Investment Association named after himself, together with Chairman Lee, known as the real owner of Esmo and the mastermind behind the no-capital M&A.
After the acquisition, they inflated the stock price by distributing false press releases suggesting that Esmo was pursuing new businesses such as artificial intelligence, virtual reality, and autonomous vehicles in collaboration with overseas companies possessing advanced technology.
Due to successive favorable information, Esmo's stock price surged up to 14 times. After the stock price rise, Jo succeeded in an exit by transferring part of his shares to Lime and reportedly earned hundreds of billions of won in capital gains.
After Jo sold his shares, Esmo's stock price plummeted, and illegal activities such as false disclosures were revealed, leading to a trading suspension. Lime lost most of the money invested in Esmo, which directly resulted in losses for the fund subscribers.
Jo, who pocketed the capital gains, went into hiding after the Lime scandal broke out but was arrested in March at an officetel in Songpa-gu, Seoul.
It is known that there are several other listed companies targeted by Jo besides Esmo. After acquiring Esmo, he attracted hundreds of billions of won in investment from Lime through issuing convertible bonds (CB).
Jo is suspected of using these funds to acquire several other financially weak KOSDAQ-listed companies and manipulating their stock prices as well. The prosecution plans to investigate these suspicions and decide whether to file additional charges.
With Jo's indictment, most of the group involved in the 'Esmo stock price manipulation' will stand trial, but the whereabouts of the ringleader, Chairman Lee, remain unknown.
Chairman Lee is regarded as the real owner of Esmo and other listed companies and the person who led the no-capital M&A and stock price manipulation. He is also known as the individual who earned the largest capital gains from the exit.
Lee, who disappeared around the same time as Jo, has been on the run for over a year, evading the prosecution's investigation. The prosecution has issued a warrant for Lee and continues to track him based on testimonies from arrested accomplices.
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