Only Three Days After Forming a Dedicated Investigation Team... Focus on Management's Fraud, Embezzlement, and Breach of Trust Charges
The prosecution, investigating the large-scale unsettled payment incident involving TMON and WEMAKEPRICE, conducted simultaneous raids on 10 locations including company offices and the residences of their representatives on the morning of the 1st.
The Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Joon-dong) has been conducting raids since the morning at seven related corporate offices including TMON headquarters in Gangnam-gu, Seoul, and WEMAKEPRICE's building, as well as the residences of Koo Young-bae, CEO of Qoo10, Ryu Kwang-jin, CEO of TMON, and Ryu Hwa-hyun, co-CEO of WEMAKEPRICE. The search warrants reportedly cite charges including fraud and embezzlement.
Investigators are conducting a search and seizure at the Qoo10 headquarters in Gangnam-gu, Seoul, on the 1st in connection with the delayed settlement of sales proceeds from TMON and WEMAKEPRICE. [Image source=Yonhap News]
The raids took place six days after the Financial Supervisory Service requested an investigation into the WEMAKEPRICE incident on the 26th of last month, and three days after the prosecution formed a dedicated investigation team.
The prosecution is focusing on allegations of embezzlement, including claims that the Qoo10 Group diverted 25 billion KRW of sales proceeds from its affiliate TMON to acquire the North American e-commerce company 'Wish.' The investigation team is reportedly paying close attention to Koo's statement in the National Assembly that part of WEMAKEPRICE's sales proceeds was used for acquiring another company.
Koo Young-bae, CEO of Qoo10 Group, is speaking at the urgent inquiry on the 'Timon and Wemakeprice settlement and refund delay incident' held by the National Assembly's Political Affairs Committee on the 30th. Photo by Hyunmin Kim kimhyun81@
These sales proceeds are funds that should be passed on to sellers when consumers purchase products through TMON and WEMAKEPRICE. Legal experts view that if part of these funds was used for acquisitions unrelated to their intended purpose, it constitutes embezzlement.
The prosecution has requested travel bans for four executives, including CEO Koo, Mok Ju-young of Qoo10 Korea, CEO Ryu Kwang-jin of TMON, and CEO 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 swiftly investigate by forming a dedicated investigation team centered on the Anti-Corruption Investigation Division 1 of the Seoul Central District Prosecutors' Office. Currently, the Seoul Central District Prosecutors' Office has formed a dedicated investigation team of seven prosecutors, including Chief Prosecutor Lee Joon-dong.
The prosecution received the investigation request from the Financial Supervisory Service on the 26th of last month, registered Koo Young-bae, CEO 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, continued transactions with vendors, or used funds for purposes other than payment settlements or refunds, charges such as fraud, embezzlement, and breach of trust may be established. Complaints and accusations from sellers and consumers against the management on these charges are accumulating with the prosecution and police.
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