Court: "Funds Managed in a Ponzi-Like Scheme Using New Investments"
"Massive Damages Caused Despite Prior Convictions for Similar Crimes"
Four Corporations Each Fined 50 Million Won
Cho, the CEO of DH & Cafeteria, who was charged with real estate investment fraud amounting to around 300 billion won, was sentenced to 17 years in prison in the first trial.
The 29th Criminal Division of the Seoul Central District Court (Presiding Judge Eom Gipyo) on the 24th sentenced Kyung, who was indicted on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Act on Regulation of Conducting Similar Receiving of Money, to 17 years in prison and revoked his bail, taking him into custody in court.
The court found that, after February 26, 2022, Kyung raised investment funds under the pretense of 'land compensation projects' and 'super short-term investments (SCR),' and managed the funds in a Ponzi-like manner by using new investments to pay interest to existing investors. During this process, the court determined that Kyung defrauded approximately 68 billion won from around 1,000 victims in the land compensation project and 240 billion won through SCR investments.
The court pointed out, "Even after it became impossible to return the investment principal or pay profits, the defendant did not disclose this and continued to attract new investments. The multi-level structure of the scheme caused the damage to spread, and a significant number of victims suffered property losses and the breakdown of personal relationships."
However, the court found Kyung not guilty regarding the solicitation of investments before February 25, 2022, and the application of the Act on the Aggravated Punishment of Specific Economic Crimes for damages exceeding 500 million won. The court also acquitted real estate developer Shin, who was named as an accomplice, of charges of defrauding investment funds.
For four corporations owned by Kyung, including DH & Cafeteria, which were indicted together, the court imposed a fine of 50 million won each.
Explaining the sentencing, the court stated, "The defendant caused massive damage despite having a prior record of similar crimes. Although some victims petitioned for leniency, substantial recovery of damages has not been achieved."
Kyung was indicted and detained in June last year on charges of collecting approximately 155 billion won from investors between April 2019 and April 2023 by promising high returns from land compensation profits after winning state-designated land at auction or public sale.
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