"Heavy Sentence for Corporate Raider in 'Stock Price Manipulation' Case...Prosecutors Vow 'Strict Investigation of Financial Crimes'"

The Main Perpetrator of the Esmo Stock Manipulation Case Sentenced to 20 Years in First Trial

The Joint Securities Crime Investigation Unit, which investigated securities and financial crimes, officially relaunched on the 1st after about a year and a half since its abolition, with a new name. The photo shows the building directory installed in the lobby of the Seoul Southern District Prosecutors' Office annex on that day. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yoo Byung-don] A corporate raider indicted on charges including no-capital mergers and acquisitions (M&A), stock price manipulation, and embezzlement of company funds related to the Lime Asset Management scandal was sentenced to 20 years in prison in the first trial. The prosecution expressed its stance to continue strict responses to financial crimes.

The Criminal Division 14 of the Seoul Southern District Court (Presiding Judge Kim Dong-hyun) on the 29th sentenced Cho Mo (42), who was detained and indicted for violating the Capital Markets and Financial Investment Business Act (Capital Markets Act) and other charges, to 20 years in prison and a fine of 30 billion KRW.

The court stated the sentencing reasons, saying, "The defendant's crimes are very serious regardless of Lime, as he used multiple listed companies in a series of crimes," and "Ultimately, it resulted in undermining the trust of general investors in the stock market."

It continued, "The various new businesses conducted by Cho had no substance and were merely means to drive up stock prices," and "This can only be seen as a crime that destroys the capitalist system."

In response, the prosecution stated in a press release on the 30th, "Market manipulation and fraudulent unfair trading crimes severely damage trust in the stock market, causing significant social and economic harm," and "The Seoul Southern District Prosecutors' Office, which is the Financial Crime Special Investigation Department, will continue to strictly investigate financial crimes and make every effort to maintain the prosecution so that sentences commensurate with the crimes are imposed."

Meanwhile, Cho was detained and indicted on charges of manipulating stock prices through false disclosures after acquiring Esmo, an automotive parts company listed on KOSDAQ, together with Chairman Lee Mo (54, currently wanted), known as the 'mastermind' of no-capital M&A and the real owner of Esmo.

After driving up Esmo's stock price, Cho succeeded in 'exit' (investment recovery) by transferring part of the shares to Lime, reportedly gaining an unfair profit of about 50 billion KRW.

After Cho sold his shares, Esmo's stock price plummeted, and illegal acts such as false disclosures were revealed, leading to a trading suspension. Additionally, Lime lost most of its investment in Esmo, causing significant losses to fund subscribers.

The prosecution obtained an arrest warrant for Cho in April 2020 and succeeded in arresting him after about a year of tracking. During the trial, new criminal facts were uncovered, leading to additional indictments.