Court Freezes Criminal Proceeds of Osstem Implant... Easier to Recover Damaged Funds

Pre-Indictment Seizure and Forfeiture Preservation Granted
Possibility to Avoid Worst-Case Scenario of Delisting

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Byung-don] The criminal proceeds of Lee Mo (45, detained), an employee of Osstem Implant accused of embezzling 221.5 billion won of company funds, have all been frozen. As a result, it is evaluated that the worst-case scenario has been avoided as the recovery of the damages has become somewhat easier.

The Seoul Southern District Court on the 18th approved the pre-indictment seizure and confiscation preservation requested by the police on Lee’s assets worth about 33 billion won, including real estate, stocks, and deposits. A representative of the Seoul Southern District Court said, "Most of the requests made by the police were approved," adding, "We cannot disclose specific details."

On the 12th, the police applied for pre-indictment seizure and confiscation preservation targeting stocks worth 25 billion won remaining in Lee’s securities trading account, real estate worth about 8 billion won, and some deposits. Pre-indictment seizure prevents the suspect from disposing of illegally acquired assets such as real estate before the court’s verdict on the charges. Pre-indictment confiscation preservation is a measure to prevent the suspect from disposing of assets to recover the amount equivalent to the profits obtained through the crime if the suspect has used the criminal proceeds.

With Lee’s criminal proceeds frozen, the likelihood of the worst-case scenario, such as the delisting of Osstem Implant, is reduced. Depending on the court’s decision, orders for seizure and confiscation preservation on the assets will be issued, making it easier to recover damages from Lee’s real estate, stocks, deposits, and other assets. The Korea Exchange had planned to decide by the 24th whether Osstem Implant would be subject to a substantial review of listing eligibility, but the preliminary review period has been extended due to additional investigations.

So far, in addition to the loss of about 76.1 billion won Lee incurred from stock investments, there could have been additional unrecoverable amounts, but for now, the urgent crisis has been averted. However, there is a possibility of further losses on the 25.2 billion won worth of stocks frozen in the stock account. Since stocks equivalent to that amount were frozen, profits or losses may occur depending on market conditions.