[La Deok-yeon Gate] La Deok-yeon Arrested... Prosecution Searches for Accomplices and Criminal Proceeds

Ra Deok-yeon Detained on 'Risk of Flight and Evidence Tampering'
Possibility of Becoming Accomplice Depending on Awareness of Collusive Trading

With the arrest of Ra Deok-yeon, the main culprit in the 'SG Securities Stock Manipulation Scandal,' and the securing of key suspects, the prosecution's investigation is gaining momentum. Going forward, the prosecution is expected to expand its investigation into accomplices and focus on uncovering the criminal proceeds hidden by the stock manipulation ring.

On the 11th, Yoo Hwan-woo, the judge in charge of warrants at the Seoul Southern District Court, held a pre-arrest suspect interrogation (warrant hearing) for Ra, who is accused of violating the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes related to concealing criminal proceeds. The judge issued the warrant, citing "risk of flight and concern over evidence destruction."

[Image source=Yonhap News]

The joint investigation team composed of the Seoul Southern District Prosecutors' Office Financial and Securities Crime Task Force, the Financial Services Commission, and the Financial Supervisory Service has been steadily securing the custody of suspects related to the stock manipulation. The day before, the joint investigation team requested arrest warrants for Ra’s closest aides, Byeon Mo and Ahn Mo, applying the same charges as Ra. Byeon and Ahn are CEOs of companies related to film and broadcasting and an indoor golf facility, respectively. Ra is listed as an inside director for both companies. The warrant hearings for Byeon and Ahn were held on the morning of the 12th at the Seoul Southern District Court, with the decision on the issuance of arrest warrants expected within the day. Im Mo, CEO in the beauty industry and known as another close aide of Ra, is also under investigation as a suspect.

From now on, the joint investigation team is expected to broaden the scope of the investigation to accomplices involved in the stock manipulation.

The joint investigation team conducted a search and seizure of Ra’s 'secret office' and residences on the 4th. They also received over 200 mobile phones, believed to have been used for collusive trading, from the police and are currently analyzing them. They are tracking Ra’s financial transactions and communication records to trace the flow of funds. However, confirming whether collusive trading occurred is expected to take some time.

The key issue regarding accomplice status is whether investors knowingly participated in boosting stock prices through 'collusive trading.' A prosecution official explained, "If investors were aware of Ra’s illegal activities, they are accomplices; if they only thought it was a legitimate investment, they are victims." Yang Tae-jung, lead attorney at Law Firm Gwangya, said, "It is not common for investors to hand over mobile phones registered under their names, digital certificates, and IDs to investment companies and allow account openings. Whether investors were completely unaware of the collusive trading needs to be examined."

Seo Ji-won, attorney at Law Firm Naran, said, "Unless investors had a special relationship with the stock manipulation ring, it is doubtful that ordinary investors could have anticipated the manipulation. Transferring money under the pretext of investment falls within the victim category, but if they knew the investment method, they could be classified as perpetrators." Another legal expert added, "Even those classified as clients could be considered accomplices if they participated in recruiting investors."

There is also interest in whether the joint investigation team will view singer Lim Chang-jung, who claims to be a victim, as an accomplice. At an investment briefing, Lim referred to Ra as "like a religion," drawing applause from attendees. Attorney Yang said, "It may be difficult to see him as a primary manipulator, but there is room to consider that he at least abetted the crime." Investigations into Kim Ik-rae, chairman of Dow Kiwoom Group, and Kim Young-min, chairman of Seoul City Gas, who sold large amounts of stock just before the crash, are also possible.

The prosecution is also seeking the illegal profits of the stock manipulation ring. It has been determined that Ra earned 264 billion KRW through market manipulation and attempted to conceal half of it, 132 billion KRW, as commission fees. The prosecution has secured a Rolls-Royce vehicle voluntarily submitted by Ahn, which is believed to have been received as a reward for recruiting investors. The prosecution also announced plans to identify and recover criminal proceeds hidden overseas by the stock manipulation ring.

Meanwhile, following the Financial Services Commission’s announcement to conduct a full investigation of 3,400 accounts related to CFDs, which were used as a means of stock manipulation, there is a possibility of obtaining additional materials related to Ra.

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