Court: "Most charges judged guilty, crime caused significant harm"
Amid concerns over significant losses for many affiliated individual business owners, excluding large retail corporations prepared for compensation due to the massive refund crisis of the payment platform Merge Point, the headquarters of "Merge Point" in Yeongdeungpo-gu, Seoul, on the 18th. Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Yoo Byung-don] The sibling CEOs of Merge Plus, the operator of 'Merge Point' which caused damage worth hundreds of billions of won due to a refund suspension incident, were sentenced to prison in the first trial.
The Criminal Division 11 of the Seoul Southern District Court (Presiding Judge Sung Bo-gi) held a sentencing hearing at 10:30 a.m. on the 10th for three people: Kwon Nam-hee, CEO of Merge Plus (38), her younger brother Kwon Bo-gun, Chief Strategy Officer (CSO, 35), and Kwon Mo, CEO of Merge Support (36).
On this day, the court sentenced CEO Kwon Nam-hee to 4 years in prison and CSO Kwon Bo-gun to 8 years in prison. Another younger brother, CEO Kwon Mo, was sentenced to 2 years and 6 months in prison with a 4-year probation. The corporation Merge Plus was fined 10 million won.
Additionally, the court ordered Kwon Bo-gun to pay a confiscation amount of approximately 5.33165 billion won and Kwon Mo to pay 716.157593 million won. In Kwon Mo’s case, the court also ordered the confiscation of bonds that had been preserved before sentencing. Furthermore, all three were ordered to pay compensation.
The court rejected the defendants' claim that there was no obligation to register as a prepaid electronic payment business under the Electronic Financial Transactions Act. The court stated, "Merge Money must be regarded as a legitimate prepaid electronic payment instrument," and judged that "the VIP subscription service also falls under electronic payment agency services."
It continued, "The defendants claim that after securing market dominance, lowering discount rates and raising merchant fees would make long-term operation possible, but this is also difficult to accept," explaining, "The defendants’ business model was accessible to anyone, and it was difficult to prevent the emergence of competitors, making it unlikely to turn a profit."
Moreover, the court stated, "It has been sufficiently proven that the defendants used the money embezzled from hundreds of victims for personal purposes such as purchasing supercars," and ruled, "Most of the charges must be recognized as guilty."
Regarding the illegality of evidence submitted by the prosecution, the court said, "There appear to be procedural defects in the collection of some evidence," but dismissed this by stating, "The procedural defects in the investigation are not greater than the necessity to punish the defendants’ crimes."
Earlier, the prosecution had requested sentences of 6 years and 14 years in prison for CEO Kwon Nam-hee and CSO Kwon Bo-gun, respectively. They also requested a 3-year prison sentence for CEO Kwon Mo. Along with this, the prosecution sought confiscation orders of approximately 710 million won and 5.33 billion won for CEO Kwon Nam-hee and CSO Kwon Bo-gun, respectively.
They were indicted on charges of fraud for selling Merge Money worth 252.1 billion won to 570,000 consumers despite the company’s accumulated losses and business suspension crisis from May 2020 to August last year.
They are also charged with violating the Electronic Financial Transactions Act for issuing and managing Merge Money, a prepaid electronic payment instrument, without registration with the Financial Services Commission from January 2020, and for operating electronic payment agency services targeting users of the 'VIP subscription service' offering a 20% discount from June of the same year.
CSO Kwon also faces charges of breach of trust under the Act on the Aggravated Punishment of Specific Crimes and was identified by the prosecution as the actual mastermind at the time of indictment.
Merge Plus gained popularity by promoting Merge Money as prepaid credit usable like cash and offering a '20% discount.' However, last August, major franchisees such as convenience stores and large supermarkets terminated contracts, triggering a large-scale refund crisis. Hundreds of subscribers demanding refunds gathered at Merge Plus headquarters in Yeongdeungpo-gu, Seoul.
At the time of indictment in January this year, the prosecution estimated the actual damage at 75.1 billion won and the damage to Merge Point affiliates at 25.3 billion won.
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