Huestem Korea CEO Sentenced to Seven Years in Prison for 1.19 Trillion Won Multi-Level Marketing Scam
Executives Also Receive Prison Sentences; Company Fined 100 Million Won
Lee Sang-eun, CEO of Huestem Korea, who was indicted on suspicion of a trillion-won illegal multi-level marketing scam, was sentenced to seven years in prison in the second trial as well.
The Criminal Division 8 of the Seoul High Court (Presiding Judges Kim Sung-soo, Kim Yoon-jong, Lee Jun-hyun) on the 2nd sentenced Lee, who was indicted for violating the Door-to-Door Sales Act, to seven years in prison and a fine of 1 billion won, the same as the first trial.
Eight executives of Huestem Korea who were tried together were also sentenced to prison terms ranging from one year and six months to three years. For some, the suspended sentences from the first trial were upheld. The Huestem Korea corporation was fined 100 million won.
The court recognized, as in the first trial, that Chairman Lee and others used a multi-level marketing-like organization to conduct monetary transactions without actual goods trading.
The court stated, "If the defendant's promotional content were to materialize, it would be like a fairy tale where all members receive a goose that lays golden eggs," adding, "However, whether the defendants operated the funds received for a limited period to create the 'goose that lays golden eggs,' or whether they deceived by showing golden eggs paid by lower-level members as if laid by the goose, is something the defendants well know."
Lee is accused of collecting more than 1.19 trillion won from about 100,000 people under the pretext of membership fees using a multi-level marketing-like organization.
Huestem Korea pretended to trade agricultural, livestock, and marine products, but in reality, only monetary transactions took place, and Lee and others reportedly recruited investment funds by guaranteeing profits.
Last November, the police additionally transferred Lee and 70 recruiters to the prosecution on charges of fraud and violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission.
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