Executives and employees who took part in a zero-capital acquisition of KOSDAQ-listed MEDICOX and the embezzlement of a large sum of company funds were sentenced to prison terms at the trial court. On the 18th, according to legal sources, the Seoul Central District Court Criminal Agreement Division 23 (Presiding Judge Oh Se-yong) on the 6th of last month sentenced Vice Chairman a person surnamed Park, indicted on charges including breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, to four years in prison, a fine of 100 million won, and a forfeiture of 62 million won.
The court sentenced another vice chairman, a person surnamed Lee, to eight years in prison, a fine of 200 million won, and a forfeiture of 430 million won. Five others, including the general president and a managing director, who were brought to trial together received suspended prison sentences.
The court recognized their crimes as a form of "corporate raiding," in which, after acquiring de facto control of a company with growth potential, they siphoned off funds through various methods and harmed the company. The court noted, "Crimes that accompany corporate raiding obstruct rational decision-making by ordinary shareholders or investors, cause them enormous direct and indirect damage, and disrupt the order of a sound capital market, making the culpability very grave."
The court pointed out that because the crimes targeted a KOSDAQ-listed company, the disruption to the capital market likely was even greater, and that with business performance having deteriorated significantly, it is difficult to be confident about normalization. However, it considered as a favorable factor that two chairmen led the highest decision-making authority.
Along with the two chairmen, they were indicted in July last year on charges of participating in a zero-capital acquisition of MEDICOX, massively siphoning off corporate funds for personal gain, and taking part in false disclosures.
The two vice chairmen allegedly siphoned funds by making it appear that the company purchased MEDICOX shares, which they had received free of charge from a real estate development firm in Nov. 2021, for 5 billion won, and it was found that they used this money as payment for a third-party allotment in a paid-in capital increase and falsely disclosed it to make it appear that a normal paid-in capital increase had taken place.
They are also accused of causing losses to the company by acquiring 5 billion won worth of convertible bonds from a real estate developer that did not need to be acquired and receiving 2 billion won back to split among themselves, and of causing losses to the company by acquiring 4.1 billion won worth of a person surnamed Lee's unlisted shares.
The five, including the general president, were indicted on charges of arbitrarily using company funds by falsely listing family members and acquaintances as employees and obtaining corporate cards, using between 130 million won and up to 290 million won per person.
The two chairmen who were the main culprits fled, but one was caught. Prosecutors additionally indicted seven people on charges including occupational embezzlement for listing them as fake employees to receive sham salaries and using corporate cards, spending 860 million won in corporate funds.