Prosecutors Conduct Search and Seizure at Residences of Tmon, Wemakeprice, and Gu Young-bae in 'Timeff Incident'

On the morning of the 1st, the prosecution investigating the large-scale unsettled payment scandal involving TMON and WEMAKEPRICE conducted simultaneous raids on the companies and the residences of their representatives. This came just six days after the Financial Supervisory Service requested an investigation into the TMON-WEMAKEPRICE incident on the 26th of last month.

The Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Joon-dong) dispatched prosecutors and investigators from the morning to the TMON headquarters in Gangnam-gu, Seoul, and the WEMAKEPRICE headquarters to secure related materials. The targets of the prosecution's search and seizure included the TMON headquarters, WEMAKEPRICE office building, and the residence of Koo Young-bae, CEO of the parent company Qoo10 Group. The search warrants reportedly cited charges such as fraud and embezzlement.

The prosecution is focusing on allegations of embezzlement, including that Qoo10 Group used 25 billion KRW of sales proceeds from its affiliate TMON to acquire the North American e-commerce company 'Wish.' The investigation team is said to be paying close attention to the fact that CEO Koo admitted in the National Assembly that part of TMON's sales proceeds were used for acquiring another company.

Timon Headquarters, Gangnam-gu, Seoul.
Photo by Yonhap News

These sales proceeds are funds that should be passed on to sellers when consumers purchase products through TMON and WEMAKEPRICE. Legal circles view that if some of these funds were used for purposes other than intended, such as acquiring affiliates, it constitutes embezzlement.

The prosecution has requested travel bans on four executives, including CEO Koo, Mok Ju-young of Qoo10 Korea, Ryu Kwang-jin of TMON, and Ryu Hwa-hyun of WEMAKEPRICE, and has been conducting legal reviews. Prosecutor General Lee Won-seok also instructed on the 29th of last month to form a dedicated investigation team centered on the Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office to conduct a swift investigation. Currently, the Seoul Central District Prosecutors' Office has formed a dedicated investigation team of seven prosecutors, including Chief Prosecutor Lee Joon-dong of the Anti-Corruption Division 1, to carry out the investigation.

The prosecution received the investigation request from the Financial Supervisory Service on the 26th of last month, registered CEO Koo Young-bae of Qoo10 Group and others as suspects, imposed travel bans, and has been conducting legal reviews. Observing the situation, the prosecution began a full-scale investigation after TMON and WEMAKEPRICE filed for rehabilitation with the Seoul Bankruptcy Court on the 29th of the same month.

The prosecution is expected to investigate when the management of Qoo10, TMON, and WEMAKEPRICE became aware of their insolvency. If they concealed their insolvency status while continuing transactions with vendors or used funds for purposes other than payment settlements and refunds, charges such as fraud, embezzlement, and breach of trust could be established. Complaints and accusations from sellers and consumers against the management on these charges are accumulating with the prosecution and police.