Police Investigate EvaJong CEO on Fraud Charges Amid Muk-Twi Controversy

[Asia Economy Reporter Gong Byung-sun] It has been confirmed that the CEO of the hotel reservation agency Evajong, who has been embroiled in a so-called 'meoktwi' controversy for receiving accommodation fees in advance from members but not remitting them to lodging facilities, is under police investigation on suspicion of fraud.

On the 29th, the Seoul Namdaemun Police Station announced that on the 2nd of last month, Edmond de Fontaine, CEO of Evajong, was booked on charges of fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Special Act). Initially, he was booked on charges of fraud under the Criminal Act, but it is known that the charges were changed during the investigation. If the amount gained by fraud exceeds 500 million won, the suspect is subject to aggravated punishment under the Special Act on fraud.

A police official stated, "Edmond is still under exit ban," and added, "We are continuing to investigate related matters."

The police believe that Edmond continued to operate the company by using the prepaid accommodation fees in a Ponzi-like manner despite being aware of Evajong’s potential bankruptcy. According to the Small and Medium Business Status Information System, Evajong’s corporation, Bon Voyage, had sales of 960 million won in 2019 but an operating loss of 1.9 billion won. This indicates that the company was already in a state of capital erosion even before the COVID-19 pandemic made business management difficult.

Furthermore, there is evidence that Edmond received members’ hotel reservation payments into his personal bank account. Some victims revealed that they deposited the remaining hotel reservation fees into an account number provided, which turned out to be Edmond’s personal account.

Evajong is an online hotel reservation agency operating on a private membership basis. It was popular among consumers for selling domestic and international luxury resort and hotel accommodation vouchers at discounts of about 30-70%. The number of members reached 550,000.

In July, consumers who booked accommodations through Evajong discovered that payments had not been made to lodging businesses, sparking the 'meoktwi' controversy. Currently, Evajong has closed its office located in Jung-gu, Seoul, and its website, effectively ceasing operations.

According to victim groups, the number of victims is estimated to be about 300, with damages exceeding 1 billion won.