Former CEO of Hisonic Sentenced to Prison for Embezzling 19.3 Billion Won Through False Disclosure

The former CEO of HiSonic was sentenced to prison after being convicted of raising hundreds of billions of won from investors through false disclosures and using the funds to defend his management rights.

According to the legal community on the 6th, the Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) upheld the original sentence of 3 years imprisonment and a fine of 10 billion won against former HiSonic CEO Ryu Mo (56), who was indicted for violating the Capital Markets Act and other charges.

Co-defendants Bae Mo (52) and Kim Mo (53), who were also indicted for conspiracy, were each sentenced to 3 years in prison.

The court stated, "The original court's judgment is reasonable and acceptable, and there is no error that affects the verdict such as exceeding the limits of free evaluation of evidence or misinterpreting the law."

Ryu and others were prosecuted for issuing 20 billion won worth of bonds with warrants (BW) in 2016, using the proceeds, excluding issuance costs, to purchase shares of the largest shareholder to defend management rights, thereby gaining approximately 19.38 billion won in illicit profits.

It was investigated that HiSonic, a domestic mobile phone camera parts manufacturer dealing with major Korean conglomerates, falsely disclosed plans to expand its factory in Vietnam and raised funds through BW.

In 2018, Gwak Mo (51), who acquired the company, was also charged with aiding and abetting the embezzlement of 9.2 billion won of company funds.

In the first trial in 2020, the court recognized fraudulent unfair trading activities and sentenced former CEO Ryu to 5 years imprisonment, and Bae and Kim to 3 years each. All three were also fined 10 billion won each.

However, in the second trial, the sentence was reduced to 3 years imprisonment for Ryu, considering that Gwak, who caused the company to face delisting due to embezzlement, was sentenced to 5 years imprisonment and a fine of 500 million won, and imposing a heavier sentence on Ryu, who sought to secure management rights, was deemed unfair. The 10 billion won fines imposed on Bae and Kim were also suspended.