[Exclusive] Victims of Huestem Korea's Suspected Illegal Multi-Level Marketing Scheme Worth 1 Trillion Won File for Bankruptcy in Court

Initiating Corporate Bankruptcy Process to Assess Asset Scale
Strategic Move to Recover Lost Investments... Court's Decision Anticipated

Some victims of Huestem Korea, embroiled in a 1 trillion won-scale illegal multi-level marketing fraud suspicion, have submitted bankruptcy petitions concerning the corporation to the court. They plan to proceed with corporate bankruptcy procedures to ascertain the scale of assets and recover the invested damages. On the other hand, Huestem Korea claims that without the consent of all creditors, it is unlikely to be accepted by the court.

According to the legal community on the 6th, about 50 victims who invested in Huestem Korea filed for bankruptcy against Huestem Korea Agricultural Cooperative Corporation and CEO Lee Sang-eun of Huestem Korea at the Seoul Bankruptcy Court on the 3rd.

Huestem Korea is suspected of embezzling more than 1.19 trillion won from 100,000 people under the pretense of membership fees through a multi-level marketing-like organization disguised as agricultural, fishery, and livestock product trading. The corporation allegedly attracted investors by promoting that the investment funds would be distributed as digital assets inflated by 2.6 times, which could be converted into cash or used to purchase agricultural products, according to the victims' claims.

Hustem Korea Company Logo

Lee Jeong-yeop, the lead attorney representing the creditors who filed for bankruptcy from the law firm Rojipsa, explained the purpose of the petition, saying, "We judged that the corporation likely engaged in illegal activities legally and therefore has debts that must be returned to the victims. Currently, (Huestem Korea) has more debts than assets, so we intend to proceed with bankruptcy procedures to fairly return the damaged funds to the victims."

If bankruptcy is declared against Huestem Korea and CEO Lee Sang-eun personally, the court will appoint a bankruptcy trustee to investigate the assets and may sell them. If Huestem Korea transferred funds to affiliated companies under the name of investments or loans, the trustee will have the legal authority to recover those assets. The proceeds from the sale of assets will be distributed to creditors proportionally to their claims.

In response, CEO Lee's side argued that bankruptcy proceedings without the consent of all creditors are unlikely to lead to an actual declaration. Lee's legal representative stated, "For bankruptcy to proceed, the consent of the majority of creditors is required. Even if some want (bankruptcy), it is not appropriate under the bankruptcy procedure system to divide (Huestem Korea's assets) into n parts without the agreement of other creditors." He added, "We plan to submit a statement to the bankruptcy court explaining this and requesting the dismissal of the bankruptcy petition."

Currently, CEO Lee is on trial after being detained and indicted in January for violating the Act on Door-to-Door Sales, etc. Separately, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency is investigating Huestem Korea for fraud and violations of the Act on the Regulation of Conducting Fund-Raising Business without Permission. Initially, this case was handled by the Suseo Police Station in Seoul, but it was recently reassigned to the Financial Crime Investigation Unit at Seoul Police Headquarters for expedited investigation.