Conspiracy to Manipulate Stock Prices During the Second Phase
Evidence of Close Communication with Kim Keonhee
The special prosecutor team led by Min Jungki indicted Mr. Lee, who has been identified as an accomplice in the "Deutsche Motors stock manipulation" case involving First Lady Kim Keonhee, on December 8 while he was in detention.
An accomplice in the Deutsche Motors stock manipulation case who fled during a search and seizure was arrested on the 20th at a rest area in Chungju and is being transported to the Kim Gunhee Special Investigation Office in Gwanghwamun, Seoul. Photo by Yonhap News
Mr. Lee is accused of conspiring with Mrs. Kim and others to manipulate stock prices between September 11 and October 22, 2012, thereby obtaining illicit gains of 13 million won.
Initially, Mr. Lee was known as the manager of Mrs. Kim's securities account during the first phase of the Deutsche Motors stock manipulation operation, which took place from December 23, 2009, to October 20, 2010.
However, the special prosecutor team determined that Mr. Lee was also involved in market manipulation crimes during part of the second phase (October 2010 to December 2012) and charged him with violating the Capital Markets Act.
Investigations revealed that around September to October 2012, during the second phase of the operation, Mr. Lee received a request from Mr. Kim, the main operator, to supply stocks, and subsequently received and sold 15,000 shares.
The special prosecutor team viewed this short-term buying and selling as part of trades intended to manipulate prices and therefore designated Mr. Lee as an accomplice in the stock manipulation scheme.
In contrast, Mrs. Kim's legal team argued that Mr. Lee cannot be considered an accomplice, claiming that he deceived Mr. Kim at the time, engaged in short-term trading for his own benefit, and then disappeared.
They asserted that Mr. Lee participated in the transaction solely for personal gain and fundamentally had different interests from the main stock manipulation group.
The special prosecutor team believes that, even excluding this transaction, Mr. Lee was involved in the Deutsche Motors stock manipulation scheme.
The team concluded that Mr. Lee was aware of the overall nature of the crime, as evidenced by his candid discussions with Mrs. Kim about stock transactions on multiple occasions.
During Mrs. Kim's previous trial for violating the Capital Markets Act, a KakaoTalk message exchange between Mrs. Kim and Mr. Lee from around October 2012 was made public and drew attention.
In the messages, Mr. Lee said, "I genuinely worry about you, so there are things I can't say. But if my name is fully exposed, what will happen? Mr. Kim (the main operator during the second phase) knows my name. I decided to step away from Deutsche." Mrs. Kim replied, "I'm actually the one who wants to keep things more secret."
In March of the following year, Mr. Lee sent a message warning that Mr. Kim, the main operator in the second phase, had been arrested on separate market manipulation charges, which could implicate the Deutsche Motors case. Mrs. Kim responded, "I see, you be careful too."
The special prosecutor team regards these conversations as evidence that Mrs. Kim was aware of the stock manipulation in advance.
In a recent special prosecutor investigation, Mr. Lee reportedly testified that he believed Mrs. Kim was likely involved in coordinated trading using her Daishin Securities account on October 28 and November 1, 2010.
These trades have become controversial as "7-second trades," since sell orders were placed just seven seconds after text messages were exchanged among the stock manipulation group.
The legal team argued that, since the main operator for the Daishin Securities and Mirae Asset Securities account transactions was someone other than Mr. Lee, his testimony was only speculation about events he did not directly experience.
Prior to the special prosecutor's investigation, the prosecution in charge of the case had decided not to indict Mr. Lee. However, the special prosecutor team found new evidence of his involvement in the Deutsche Motors stock manipulation and reopened the investigation.
Mr. Lee fled the scene during a search and seizure operation on October 17 but was apprehended 34 days later on November 20 near a rest area along a highway in Chungju, North Chungcheong Province, and was detained on November 22.
Meanwhile, the special prosecutor team announced on this day that on December 4, it had requested an arrest warrant for Mr. Lee, the chairman of a KOSDAQ-listed company, who is suspected of assisting former Sambo Construction Vice Chairman Lee Kihun (who has been indicted and detained) in his escape.
The special prosecutor team believes that Mr. Lee provided a vehicle and communication devices to help the former vice chairman move to a hideout and charged him with aiding and abetting a fugitive.
The team also stated that, having identified evidence that Mr. Lee was recently preparing to flee the country, it did not disclose the request for an arrest warrant until just before the court's pretrial detention hearing, in order to maintain investigative secrecy.
Former Vice Chairman Lee was indicted and detained on September 26 on charges of participating in the Sambo Construction stock manipulation scheme with Chairman Lee Iljun and former CEO Lee Eunggeun in May and June 2023, gaining approximately 36.9 billion won in illicit profits.
Former Vice Chairman Lee failed to appear at a court pretrial detention hearing in July and went into hiding, but was arrested in Mokpo, South Jeolla Province, 55 days after fleeing.
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