Former chairman of the board and founder Kang Woong-cheol and major shareholder Han Joo-hee of the private equity fund Han & Brothers, who were engaged in a management rights dispute over shares of Bodyfriend, were both handed over to the court on charges of embezzlement and fraud, respectively.
The Major Crimes Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Eo In-sung) announced on the 24th that former chairman Kang was indicted without detention on charges of embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes, and Han was indicted without detention on charges of fraud under the same act and violations of the Attorney-at-Law Act.
The two, who jointly managed Bodyfriend, ended up being investigated by prosecutors after filing counter-lawsuits against each other in the management rights dispute.
Investigation results revealed that former chairman Kang embezzled 2.5 billion KRW in employee invention compensation, 1.2 billion KRW in advisory and retirement gratuities, and 30 million KRW via corporate credit cards by using his own and his mother-in-law’s names while managing the company in the past.
It was found that Kang used the embezzled company funds for high-end officetel lease deposits, luxury watch purchases, and insurance premiums for luxury imported cars.
In Han’s case, it was revealed that he acquired Bodyfriend with almost no equity by using a 'private equity fund loan rollover' method.
Han contracted to invest 31 billion KRW under the name of the private equity fund 'Han & Brothers' to maintain his management rights stake in Bodyfriend, but the actual investment funds consisted of 10.7 billion KRW of investment money fraudulently obtained by deceiving founder Kang and 15.2 billion KRW of short-term loans received in Han’s personal capacity, according to the prosecution.
Subsequently, Han, together with Kang, deceived Bodyfriend’s directors and pocketed 19.5 billion KRW under the pretext of internal company loans, most of which was used to repay his own borrowings.
The prosecution requested arrest warrants for former chairman Kang and Han in October last year, but the court dismissed them. Recently, the prosecution requested another warrant for Han, but it was dismissed again.
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