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Actor Lee Jung-jae under probe

January 16, 2015
Lee Jung-jae

Lee Jung-jae

By Kim Se-jeong

Victims of the Tongyang Group’s fraudulent bond issuance filed a complaint with the prosecution Friday against its Vice Chairwoman Lee Hye-kyung and actor Lee Jung-jae for allegedly causing losses to investors.

The investors, along with members of the civic group Spec Watch Korea, claimed the vice chairwoman provided about 16 billion won (about $927,000) to Seorim C&D in 2009; Lee Jung-jae is a major shareholder of the firm.

Seorim developed a luxury apartment building project in Samseong-dong, southern Seoul in 2009, while the Tongyang Group’s construction arm, Tongyang Inc., was also a contractor for the project.

Lee, a well-known TV and movie actor, founded Seorim in 2008. He owns 35 percent of the firm and serves as a director. His father was president of the company between March 2011 and November 2012.

The victims argued that the provision of the funds to Seorim worsened Tongyang’s liquidity problems. They demanded the vice chairwoman be punished for a breach of trust as she aggravated the situation through her mismanagement.

They said that Lee Jung-jae is also partly responsible for the crisis with Tongyang. The company has been under court receivership since 2013 due to the industry-wide credit crunch.

Tongyang Inc. sustained large losses from the building project in Samseong-dong called La Terrase after it failed to sell all the newly-built luxury apartments. Located in a wealthy residential and business district of southern Seoul, La Terrase proved unattractive for buyers amid a prolonged slump in the property market.

Only six of the 18 apartments have so far been sold, and this has added worsened the financial woes of Tongyang.

In responding to the complaint, Lee’s entertainment agency denied allegations that he was involved in the dubious deal between Seorim and Tongyang.

The agency said it will take legal action to prove he had nothing to do with Tongyang’s financial crisis. “We will discuss the matter with our lawyer.”

In October last year, a district court sentenced Tongyang Chairman Hyun Jae-hyun to 12 years in prison on charges of selling his group’s bonds after he realized that the company would default on its debts amid a looming liquidity crisis.

He was also found guilty of embezzling 14.1 billion won in company funds.

According to the court, Hyun ordered Tongyang affiliates to issue corporate bonds and bills worth 1.3 billion won ($1.2 million) between February and September of 2013, despite knowing the various firms could not pay off their maturing debts. The number of investors to lose money from Tongyang is estimated to be 40,000 people.

According to the financial regulators, former Tongyang Securities CEO Jung Jin-seok encouraged the firm’s staff to expand sales of bonds and corporate bills issued by Tongyang’s troubled affiliates, telling them that the financial troubles would abate.

Jung told them that the group would get additional loans and financial support from the state-run Korea Development Bank (KDB) and the Orion Group, an offshoot of Tongyang.

In fact, the KDB and Orion rejected Tongyang’s request for an additional financial lifeline.

Vice Chairwoman Lee is also believed to be Lee Jung-jae’s long-term sponsor.

Lee, who starred in the movie “The Big Match” last November, announced recently that he was dating Lim Se-ryong, the ex-wife of Samsung Electronics Vice Chairman Lee Jae-yong.

Born in 1973, the actor rose to stardom with the iconic SBS TV drama “Hourglass” in 1999, playing the heroine’s silent bodyguard. His made his film debut in 1993 when he appeared in “Love is Oh Yeah!”

His first major acting success came in 1998 when he played a role in the award-winning film “An Affair.”

“City of the Rising Sun” in 1999 won him a Best Actor award at the Blue Dragon Film Awards and the Korean Association of Film Critics Award. In 2010, he starred in an erotic thriller “The Housemaid” which was screened at both the Cannes Film Festival and the Toronto International Film Festival.

In his personal life, Lee dated actress Kim Min-hee for three years until 2006. He confirmed his romantic relationship with Lim Se-ryong this month, having previously denied they were a couple.

Apart from Seorim C&D, Lee has several other businesses he runs with fellow actor and best friend Jung Woo-sung.

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