[La Deok-yeon Gate] Golf Practice Ranges and Restaurants Used as Money Laundering Channels... Suspicions Involving High-Ranking Political and Business Figures

CEO Ra Deok-yeon Suspected of Using Acquisitions via M&A as a 'Financial Reservoir'
Evidence of Direct and Indirect Involvement of Figures from Politics, Business, Media, and Medical Fields

Ra Deok-yeon, CEO of Hoan, who was arrested by the prosecution on charges including market manipulation, unregistered investment discretionary business, and concealment of criminal proceeds, was revealed to have been involved in mergers and acquisitions (M&A) of several companies in the past. It is presumed that he aimed not only for simple stock investments but also for corporate management rights. In particular, it is known that he hardly engaged in management activities such as improving corporate performance, raising suspicions that he merely acquired or established corporations as 'fund reservoirs.'

Extending Reach to KOSDAQ by Acquiring Cytogen CB

Ra first made his name known in the KOSDAQ market around September 2020. The target was the bio-diagnostic company Cytogen. At that time, the 'Jeil Bio Fund' acquired convertible bonds (CB) worth 7 billion KRW of Cytogen. With a conversion price of 20,200 KRW, the fund secured a total of 346,534 shares (6.15%) of Cytogen.

CEO Ra Deok-yeon Hoan, who was arrested by the prosecution in connection with the SG Securities crash incident. Photo by Yonhap News

The largest shareholder of Jeil Bio Fund was Ra Deok-yeon, holding 50.6% of the shares. The fund’s representative, Mr. Yoon, is the CEO of Jaesan Holdings, a personal company of Lee Jae-hwan, former CEO of CJ Powercast and brother of Lee Jae-hyun, chairman of CJ Group. At that time, Ra and Lee jointly led the fund. Later, Jeil Bio Fund changed its name to 'Ascent Bio Fund' and continued to purchase Cytogen shares on the market. Eventually, Ascent Bio Fund became the major shareholder holding 20.5% of Cytogen shares. This sparked rumors in the bio industry that Ascent Bio Fund was acquiring management rights of Cytogen.

However, founder Jeon Byung-hee defended his position as the largest shareholder by exercising the CB call option. Jeon Byung-hee, CEO of Cytogen, holds about 20.59% of the shares. Currently, Ra is reported to have abandoned the intention to acquire Cytogen and has disposed of the fund shares. Cytogen is a bio-diagnostic platform company producing circulating tumor cell (CTC)-based liquid biopsy genomic data. On the 27th of last month, it signed a technology development memorandum of understanding with Macrogen for liquid biopsy genomic analysis services.

Ra also acquired shares in Yes I Am Entertainment, the agency of singer Lim Chang-jung. According to industry sources, Ra purchased 50% of Yes I Am Entertainment shares for 5 billion KRW. After acquiring the shares, Ra registered his close aides, Mr. Ahn and Mr. Byun, as inside directors of Yes I Am Entertainment. Mr. Ahn is a professional golfer who operates the S Golf Practice Range in Gangnam, one of Ra’s fund reservoirs. Yes I Am Entertainment has a total of five inside directors, of which Ra controls 40%. The remaining board members are Lim’s wife and family.

Lim Chang-jung, who became acquainted with Ra through the acquisition of Yes I Am Entertainment shares, is known to have personally invested about 3 billion KRW in Ra. Lim also attended VIP charity golf events hosted by Ra for investors who made large investments, praising Ra.

Furthermore, Ra secured management rights of Yap Company last September by investing 24 billion KRW. Yap Company, established in June 2013, is an artificial intelligence (AI) company. According to its business report, Yap Company is commercializing services such as ordering, attendance management, social safety nets, and advertising services based on location technology, and is pursuing overseas expansion using its international network.

One of Yap Company’s major shareholders is Value Invest Korea (VIK). VIK is known for conducting an astronomical fraud scheme amounting to about 1 trillion KRW through a multi-level marketing method, claiming to generate profits by investing in companies. This caused over 30,000 victims.

Companies invested in by VIK include Yap Company, Shinilgen, Asta, and dozens of others. VIK’s CEO, Lee Cheol, was sentenced to 12 years in prison in 2019 for illegal investment inducement amounting to about 700 billion KRW. In February, the prosecution additionally indicted Lee on charges of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

Ra has used Yap Company’s office in Jung-hak-dong, Seoul, as his business base, meeting with Lim Chang-jung and using it for various purposes including investment discussions, year-end parties, and dinners. Ra also listed himself as a director of Haesung Academy, chaired by former Ananti Group chairman Lee Joong-myung, and introduced himself as chairman of Yap Global’s board.

Some speculate that Ra attempted to acquire management rights of companies but, finding operations difficult, used them as channels to launder investment profits. In fact, Yap Company, acquired by Ra, was in a state of complete capital erosion from 2019 to 2021. As of 2021, its sales were about 500 million KRW. Net losses were 27 billion KRW in 2019, 6.8 billion KRW in 2020, and 4.1 billion KRW in 2021, gradually decreasing but still in the red. This raises suspicions that Ra acquired Yap Company with the purpose of using it as a money laundering channel.

Ra is also suspected of employing a so-called 'card kkang' method, receiving part of the profits as commissions through various corporations such as golf practice ranges, restaurants, hospitals, galleries, fitness centers, and cable TV channels. He is also suspected of purchasing real estate such as golf courses abroad to embezzle profits and commissions realized through stock price manipulation.

Notably, a week before the stock price crash, Ra established a furniture company in Gangnam. According to industry sources, on the 18th of last month, Ra set up a new corporation named 'Spetheic Co., Ltd.' in Nonhyeon-dong, Gangnam-gu, Seoul. The capital is 500 million KRW, which is relatively large for a new corporation. The business purpose includes manufacturing and wholesale/retail of wooden furniture and other furniture. The father of professional golfer Ahn, a close aide of Ra, is also in the furniture business. Given that golf practice ranges and galleries were used as money laundering channels, suspicions arise that this furniture company was established for similar purposes.

Big Names Mentioned Including Former Special Prosecutor Park Young-soo and Former Chairman Lee Joong-myung

The recent stock price manipulation scandal involves allegations of connections with figures from politics, business, media, and medical fields. The Seoul Southern District Prosecutors’ Office stated that high-ranking officials in politics and government are also under investigation, indicating the issue will escalate. Names mentioned include Jang, a former Blue House administrative officer who introduced an internet media outlet acquired by Ra; former special prosecutor Park Young-soo, who provided legal advice and received fees from companies used as Ra’s money laundering channels; former chairman Lee Joong-myung; and the former publisher of C Daily, who is suspected of involvement beyond simple investment in Ra’s related businesses.

Yoon Sung-tae, chairman of pharmaceutical company Huons Group, is also suspected of investing in Ra. Former chairman Lee Joong-myung of resort company Ananti Group is suspected of investing in stocks involved in the price manipulation. Ananti CEO Lee Man-gyu stated in a press release, "Ananti has no connection whatsoever with the reports related to former chairman Lee Joong-myung. My father has lost all the assets he had accumulated over the years due to this incident and is staying secluded, grieving."

Hospital director Joo, who introduced doctors to Ra, is also considered a key figure. Joo is known as a major player in the medical industry, operating six businesses including a hospital. For years, he has employed several doctors as deputy directors at his hospital. These doctors saved money while working there and later opened their own hospitals. It is said that Joo provided advice during this process. Through this method, Joo built relationships with dozens of doctors and became a well-connected figure in the industry.

※The recent stock price crash triggered by SG Securities has sounded an alarm for the capital market order. Readers’ tips will be a great help in uncovering the truth. We welcome any reports regarding investment damage cases, suspicions of stock manipulation and asset concealment by Ra Deok-yeon’s group, insider information on large-scale sales by major shareholders of Dow Data and Seoul Gas, and any other relevant information (jebo1@asiae.co.kr). Asia Economy will do its best to establish a transparent capital market order.