[La Deok-yeon Gate] 'SG Incident' La Deok-yeon and 2 Others Indicted and Detained for 730.5 Billion KRW Illicit Gains (Comprehensive)

Three Other Accomplices Face Pre-Arrest Warrants
Concealing 194.4 Billion Won in Fees

The prosecution investigating the 'SG Securities-led stock price crash incident' has arrested and indicted three individuals involved in stock price manipulation, including CEO Ra Deok-yeon (42) of Hoan, and has also requested pre-arrest warrants for three other key figures. The prosecution's investigation is expected to continue even after the indictment to find accomplices.

On the 26th, the Financial and Securities Crime Joint Investigation Division of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Dan Seong-han) announced that they had arrested and indicted CEO Ra, his close aide Byun Mo (40), and former professional golfer Ahn Mo (33) on charges of violating the Capital Markets Act and the Act on Concealment and Disposal of Criminal Proceeds.

It is known that CEO Ra organized and directed the overall framework of the crimes, including recruiting investors, selecting stocks, and trading shares. Byun, who was also arrested, served as the general manager overseeing employees, while Ahn reportedly recruited high-value investors.

The prosecution has applied the same charges and requested pre-arrest warrants for Jang Mo (35), Park Mo (37), and Jo Mo (41), who were also centrally involved in the stock price manipulation. Jang was in charge of finance and managing criminal proceeds, Park led the stock trading team responsible for market manipulation, and Jo managed investor recruitment and client relations.

[Image source=Yonhap News]

According to the prosecution, from May 2019 to last April, CEO Ra and others manipulated the stock prices of eight listed companies, including Samchully and Dow Data, through 'matched trading' using thousands of billions of won raised from investors through profit agreements. The prosecution estimates that the group illegally gained approximately 730.5 billion won during this process.

Additionally, from January 2019 to last April, they are accused of attracting discretionary investment clients worth thousands of billions of won without registering as financial investment businesses and managing CFD accounts on behalf of clients. Through this, they obtained about 194.4 billion won in illicit profits.

From April 2020 to last April, the group is also accused of laundering and concealing criminal proceeds by using fees received from investors to make payments at golf courses, restaurants, and hospitals where the stock manipulation group members were registered as CEOs or internal directors, disguising these as business revenues, or receiving payments through nominee accounts.

Earlier, the prosecution arrested the three main culprits, including CEO Ra, on the 9th and requested arrest warrants on the 11th. Judge Yoo Hwan-woo, in charge of warrants at the Seoul Southern District Court, conducted pre-arrest hearings on the 11th and 12th and issued arrest warrants citing concerns over flight risk and evidence tampering.

Even after indicting the three main culprits, the prosecution's investigation related to the 'SG Securities-led stock price crash incident' is expected to continue. A prosecution official stated on the 23rd, "Although we are indicting on the charges applied at the time of arrest due to the expiration of the detention period, investigations into tax evasion and other aspects will continue," and added, "We are investigating both known and unknown accomplices." They also said they would seek to recover more criminal proceeds through seizure and preservation measures.

[Image source=Yonhap News]

The 'SG Securities-led stock price crash incident' drew attention after the prosecution reportedly imposed travel bans on 10 people related to stock price manipulation on the 25th of last month. The involvement of singer Lim Chang-jung also fueled public interest.

The prosecution has been investigating to prove the charges against the stock manipulation group and secure criminal proceeds. They conducted raids on CEO Ra's office at Signiel in Jamsil, Songpa-gu, and the residence and hospital of Dr. Joo, a rehabilitation medicine specialist known to have recruited physician investors.

Before the arrest of the three indicted individuals on the 28th of last month, the prosecution raided the Korea Exchange to secure stock trading records and investigation documents from financial authorities. After receiving about 200 mobile phones seized from Hoan FG's office in Gangnam-gu from the police, the prosecution identified about 50 phone numbers suspected of being used for matched trading and related securities accounts, requesting analysis from the Korea Exchange. The Korea Exchange analyzed approximately 250 securities accounts and IP addresses, filtering out accounts suspected of matched trading and handed the information to the prosecution.

On the 24th, to secure materials related to Contract for Difference (CFD) transactions, the prosecution raided the headquarters of Kiwoom Securities and KB Securities located in Yeouido. CFDs are derivatives used by CEO Ra Deok-yeon (42) and others involved in stock price manipulation as a means of market manipulation. CFDs allow leverage up to 10 times with a 40% margin without owning the underlying stocks.

The prosecution announced that they have actually secured 15.5 billion won of the criminal proceeds. Among the secured amount, 5.5 billion won of criminal proceeds owned by CEO Ra consist of real estate, lease deposits, vehicles, office lease deposits, and vehicle lease deposits.

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