“In order to prove Koo Young-bae’s fraud and embezzlement, internal documents and statements must be released.”

Prosecutors, 3rd search and seizure on the 5th... Securing the head of finance's mobile phone
Recognizing the financial crisis is key... Management likely to deny ‘intentionality’

It has been reported that the prosecution, which is investigating the delay in settlement of sales proceeds by Timon and WeMakePrice, has secured two years' worth of call records from the head of the finance division, who oversaw the flow of funds between affiliates. While attention is being paid to whether this will be the smoking gun that will reveal the fraud and breach of trust of management, including Q10 Group CEO Koo Young-bae, the legal community points out that internal documents or statements must be released in order to make a clear judgment.

According to the legal community on the 5th, the Seoul Central District Prosecutors' Office Timon and WeMakePrice's dedicated investigation team (Chief Prosecutor Lee Jun-dong) sent prosecutors and investigators to three locations, including the Q10 Technology, Timon, and WeMakePrice offices in Gangnam-gu, Seoul, to conduct the third search and seizure starting this morning. Q10 offices were searched and seized on the 1st and 2nd, but it was reported that the search was conducted to secure additional accounting data related to the unsettled situation.

The prosecution is said to have secured the mobile phone of Lee Si-jun, head of Q10 Group's financial headquarters, through three seizures and searches. Director Lee is known as CEO Koo’s closest associate. The prosecution plans to summon CEO Koo as early as this week after investigating how the 'Timeep non-settlement incident' occurred, changes in financial situation, and when the group management became aware of it, based on the contents of Lee's phone call with CEO Koo and other executives.

The legal community believes that the key to the prosecution's investigation will be determining when the parent company, Q10 Group, and executives of Timon and WeMakePrice became aware of the serious financial crisis. This is because, in order to constitute a crime of fraud, it must be proven that the transaction was made by intentionally deceiving the other party, knowing that the transaction did not have the intention or ability to fulfill the obligations agreed upon at the time of the transaction.

On the other hand, CEO Koo and others are expressing that this incident was an inevitable result of aggressive investment to secure market dominance due to the nature of the platform business. The intention is that although they were aware of the accumulated financial crisis, there was no intention to intentionally deceive them. The prosecution plans to secure a variety of human and material evidence to overcome this logic.

Attorney Bang In-tae of Daeryun Law Firm, who represents the victims, said, "Timon and WeMakePrice were not substantial companies due to capital erosion. It is reasonable to assume that they were aware of (the financial crisis) in advance," but added, "In order to prove with objective evidence more than what moment they were aware of, internal reporting documents or insider statements would need to come out."

[View full article] Asia Today -““In order to prove Koo Young-bae’s fraud and embezzlement, internal documents and statements must be released” (View full text)