Prosecutors Decide Not to Indict Kim Geon-hee on Charges of Involvement in Deutsche Motors Stock Manipulation

'No Charges' Verdict After 4 Years and 6 Months

Since April 2020, the prosecution has been investigating allegations that Mrs. Kim Geon-hee was involved in stock price manipulation of Deutsche Motors. After four and a half years, they decided not to indict her, citing 'no charges.' Although Son, who acted as the 'jeonju (錢主)' like Mrs. Kim, was found guilty of aiding and abetting in the appellate court, the prosecution concluded that it was difficult to indict Mrs. Kim on charges of aiding stock price manipulation when considering the law and evidence comprehensively.

On the 17th, the Anti-Corruption Investigation Division 2 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Choi Jae-hoon) decided not to indict Mrs. Kim and her mother, Choi Eun-soon, who had been accused of involvement in Deutsche Motors' stock price manipulation.

The prosecution explained the background, stating, "It is difficult to recognize that Mrs. Kim conspired with the main perpetrators or participated in the crime by entrusting account management or placing stock trading orders while being aware or foreseeing their market manipulation, so she cannot be indicted."

Mrs. Kim was accused of conspiring with former Deutsche Motors Chairman Kwon Oh-soo to entrust six securities accounts to a person introduced by Kwon from January to November 2010 or to trade stocks at Kwon's request, thereby participating in market manipulation (violation of the Capital Markets Act).

Appellate Court Convicted 'Jeonju' Son of Aiding and Abetting, Recognizing Market Manipulation Awareness... No Circumstances or Evidence Against Mrs. Kim

The prosecution stated that the nature of involvement between Son, who was convicted of aiding and abetting in the appellate court, and Mrs. Kim differs. The prosecution said, "Son was not a mere jeonju but a professional investor who traded stocks at the request of the main perpetrator Kim and directly placed market manipulation orders through the Home Trading System (HTS). He also had a history of being mobilized as a stock supply and demand force before."

The prosecution added, "While it is sufficiently recognized that Son was aware of the market manipulation and facilitated the crime, Mrs. Kim lacks such circumstances and evidence, which was also referenced in determining whether aiding and abetting applies."

The prosecution explained the investigation results by classifying judgments according to the six accounts. First, regarding the Shinhan, DB, Mirae Asset, and DS securities accounts used as discretionary accounts, Mrs. Kim stated that she entrusted account management to stock experts or securities company employees and was unaware of market manipulation transactions, and that neither the account managers nor former Chairman Kwon knew about the market manipulation crimes. The prosecution said this aligns with the testimonies of Kwon and others involved in the stock price manipulation.

The prosecution particularly noted, "It is difficult to conclude or prove that Mrs. Kim entrusted the accounts while being aware that Kwon and others were manipulating the market solely because market manipulation orders came from the entrusted accounts."

Regarding the Daishin Securities account, which was directly operated, Mrs. Kim's side claimed she consulted securities company employees and made trading decisions herself. After reviewing the entire order recordings, the prosecution confirmed that Mrs. Kim was seen deciding trades in consultation with securities company employees and concluded there was no charge. For the Hanwha Investment & Securities account, where trades were made by direct phone orders through a securities company employee, the prosecution stated, "There was only one instance of collusive trading, and there is no circumstance or evidence that Mrs. Kim contacted the main perpetrators of market manipulation around that time."

The prosecution found it difficult to simply compare Son, who acted as an investor, and Mrs. Kim on the same level. Son had clear evidence of direct communication with the main stock manipulation player Kim and others, indicating awareness of the crime, whereas Mrs. Kim was not confirmed to have had direct communication with the stock manipulation group.

Josangwon, the 4th Deputy Chief Prosecutor of the Seoul Central District Prosecutors' Office, is announcing the investigation results of the case involving the president's spouse's alleged involvement in manipulating the stock price of Deutsche Motors on the 13th floor briefing room of the Seoul Central District Prosecutors' Office in Seocho-gu, Seoul, on the 17th. In the announcement, the prosecution cleared Mrs. Kim Geon-hee, who was suspected of stock price manipulation of Deutsche Motors. Photo by Kang Jinhyung

Prosecution: "Evidence and Law Strictly Reviewed"... Political Fallout Expected to Be Significant

The prosecution stated, "This is the result of strictly reviewing the suspect (Mrs. Kim)'s involvement in market manipulation based solely on evidence and law without any other considerations," adding, "The essence of this case is that the main perpetrator, former Chairman Kwon, used the accounts and funds of 'early investors,' including the suspect who invested before the listing, to secure supply and demand accounts or stocks at the request of the main manipulators during the market manipulation crime."

Meanwhile, following the luxury bag bribery case, the prosecution's decision not to indict Mrs. Kim again is expected to intensify criticism of the prosecution for being 'shielding' and calls for a special investigation into Mrs. Kim, especially from opposition parties such as the Democratic Party. This case began investigation in April 2020 during the Moon Jae-in administration and has been fraught with controversies throughout the four and a half years until the final disposition was made. After former Democratic Party lawmaker Choi Kang-wook's complaint, the case was reassigned from the Criminal Division 1 to Criminal Division 6 due to lack of progress. In October 2020, then Minister of Justice Choo Mi-ae stripped then Prosecutor General Yoon Seok-youl, now President, of his investigative authority. The prosecution reassigned the case to the Anti-Corruption Investigation Division 2 in November 2020. Current Prosecutor General Shim Woo-jung also lacks investigative authority.

In July this year, Mrs. Kim was interviewed face-to-face, and her mother Choi was investigated privately. A full investigation of 91 jeonju was also completed. On the 13th of last month, Son was sentenced guilty of aiding and abetting in the second trial.