Prosecutors Seek 7-Year Prison Term for Tire Bank Chairman Kim Jungkyu on Tax Evasion Charges

Six Years After the Appeal Began...
Chairman Kim Claims, "Not Name Disguise, but a New Business Model"

Prosecutors have requested a seven-year prison sentence for Kim Jungkyu, chairman of Tire Bank, who was brought to trial on charges of evading tens of billions of won in taxes by disguising the ownership of franchise stores. It has been six years since the appellate trial began in 2019.

At the sentencing hearing held on the 21st at the Daejeon High Court's Criminal Division 1 (presiding judge Park Jinhwan), prosecutors asked the court to sentence Chairman Kim to seven years in prison and a fine of 70 billion won. For the five Tire Bank executives and employees who were indicted alongside him, prosecutors requested sentences of five to six years in prison.

Kim Jungkyu, chairman of Tire Bank, is answering reporters' questions after attending the final hearing of the tax evasion appeal trial held at Daejeon High Court on the 21st. Photo by Yonhap News

Previously, in October 2017, Kim was indicted on charges of evading around 8 billion won in comprehensive income tax by using a so-called "name disguise" scheme. He allegedly concealed cash sales or underreported transaction details by making it appear as if certain Tire Bank outlets were operated by independent franchisees.

Kim denied the charges, claiming that this was a new business model called the "headquarters investment franchise model." However, in the first trial in 2019, he was sentenced to four years in prison and fined 10 billion won. The court did not take him into custody at that time in order to protect his right to defense. The executives and employees were sentenced to two years and six months to three years in prison, suspended for four to five years.

The first trial court stated, "The defendant (Chairman Kim) operated actual businesses through hundreds of franchises, but evaded comprehensive income tax by registering businesses under the names of multiple individuals using the name disguise method. As de facto owner of Tire Bank, a one-person company, he committed the crimes in an organized manner with numerous employees from a position of superiority, and embezzled company funds under the pretext of collecting his own receivables without following proper procedures."

The appellate trial took six years to reach the sentencing hearing because Kim's side filed an administrative lawsuit to determine the scope of the tax claims related to this case. The criminal trial was put on hold until the Supreme Court ruled on the administrative case, and the trial resumed in earnest in August last year.

The appellate court's verdict is scheduled to be delivered on July 23.