Amicogen Chairman Shin Yong-cheol Sued for 5 Billion Won Fraud Allegation

Did Not Establish Pledge After Receiving Loan With Amicogen Shares as Collateral
Shin’s Side: "Will Repay Once the Actual 'Jjeonju' Who Lent the Money Is Confirmed"

Shin Yong-cheol, chairman of Amicogen, a company listed on KOSDAQ, has been sued for fraud involving 5 billion KRW. The allegation states that Chairman Shin borrowed 5 billion KRW using Amicogen shares as collateral but neither set the collateral nor repaid the money. Shin’s side stated that there is a ‘jjeonju’ (a slang term for the actual money owner) behind the complainant, making the repayment target ambiguous, but once clarified, they will repay immediately.

According to the financial investment industry on the 25th, Mr. Lee filed a fraud complaint against Chairman Shin at the Seoul Songpa Police Station.

According to the complaint, on April 19 last year, Mr. Lee signed a loan agreement worth 5 billion KRW with Chairman Shin. The contract was for Mr. Lee to lend money to Chairman Shin at an annual interest rate of 6%. Chairman Shin agreed in the contract to provide Amicogen shares equivalent to 120% of 5 billion KRW as collateral for the loan.

The loan period was from April 19 to October 19 last year. According to the contract, Mr. Lee transferred 5 billion KRW to Chairman Shin on April 22 last year. However, according to the complainant, Chairman Shin did not establish a pledge on the Amicogen shares after receiving the money.

The complainant’s representative claimed, “Chairman Shin has not fulfilled the collateral setting to this day, citing an unreasonable reason that Amicogen is in the middle of merger and acquisition (M&A) negotiations,” and added, “He deceived the complainant to embezzle 5 billion KRW despite having no intention to set the collateral from the beginning.”

Furthermore, “After borrowing 5 billion KRW from the complainant, Chairman Shin received stock-collateralized loans from Shinhan Financial Investment and Kumho Agricultural Cooperative Corporation on August 19 and September 23 last year, respectively, and at that time, he did establish a pledge on the shares,” emphasizing, “He could have set the pledge on the shares at the time of the contract with the complainant but did not fulfill it.”

As the collateral was not set, the complainant demanded immediate repayment of the 5 billion KRW loan and 6% annual interest on November 6 last year. Chairman Shin responded to the complainant, saying, “I have various duties including a business trip to China,” and promised to repay 500 million KRW by December 27, 2024.

However, Chairman Shin neither repaid the 500 million KRW nor fulfilled the loan agreement, according to the complainant. Eventually, as the complainant could neither secure the stock collateral nor recover the money, they took provisional seizure measures on some of Chairman Shin’s shares through civil preservation procedures.

The provisional seizure case was disclosed in Chairman Shin’s large shareholder report on the 22nd of last month. However, the fact that Chairman Shin borrowed money from Mr. Lee or signed a stock collateral contract was not disclosed.

Regarding this, an outside director of Amicogen, who identified himself as Chairman Shin’s legal representative, stated, “Although the loan and stock collateral contract counterpart is Mr. Lee, the actual ‘jjeonju’ is behind him, and considering the M&A issue, the stock collateral setting was postponed,” adding, “Currently, due to circumstances of that ‘jjeonju,’ Chairman Shin cannot repay the money, but once the repayment target is decided, he will repay immediately with interest.”