SNUDCO Recovers 6.2 Billion Won in Major Daejang-dong Case

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Background of the Daejang-dong Corruption Case

The ongoing controversy surrounding the prosecution’s decision to abandon its appeal in the 'Daejang-dong corruption case' has raised significant concerns about the recovery of criminal proceeds. This case involves the Seoul Seongnam Urban Development Corporation (SNUDCO), which suffered a breach of trust and has only managed to secure assets worth 6.2 billion Korean won from the Daejang-dong group so far.

In June 2022, SNUDCO obtained a provisional disposition to prohibit the disposal of a townhouse valued at 6.2 billion Korean won owned by Cheonhwa Dongin No. 1 through the Suwon District Court’s Seongnam Branch. Cheonhwa Dongin No. 1, a subsidiary of Hwacheon Daeyu Asset Management, was involved in the Daejang-dong project and is known to have received 121.3 billion Korean won in development profits.

Provisional Disposition Measures

The provisional disposition is a legal measure designed to prevent debtors from arbitrarily selling or transferring assets during litigation. SNUDCO filed this measure as a preliminary step before initiating a lawsuit to cancel fraudulent acts against Kim Man-bae, and the lawsuit is currently ongoing.

Additionally, SNUDCO applied for provisional dispositions on a building in Gangnam-gu, Seoul, and a business site in Gangwon Province owned by Lawyer Nam Wook, the actual owner of Cheonhwa Dongin No. 4. However, these requests were rejected due to insufficient evidence for the rights to be preserved. A source from SNUDCO explained that the applications were not accepted because of the lack of sufficient evidence.

Recovery of Criminal Proceeds

Concerns have been raised that the prosecution's decision to abandon its appeal has hindered the recovery of criminal proceeds. The Minister of Justice, Jung Sung-ho, and the ruling party argue that recovery is possible through civil litigation. However, critics highlight that the assets secured by SNUDCO are significantly lower compared to the 780 billion Korean won identified by prosecutors as criminal proceeds.

A lawyer who previously served as a presiding judge noted that even if SNUDCO wins a civil lawsuit, actually recovering the money could be challenging since assets may have been disposed of or transferred beforehand.

Court Ruling and Confiscation Order

The Seoul Central District Court recognized the Daejang-dong group’s breach of trust in the course of business as guilty on the 31st of last month and ordered the confiscation of 47.3 billion Korean won, including 42.8 billion Korean won that Kim Man-bae and Yoo Dong-gyu agreed to split as breach of trust proceeds and 4.5 billion Korean won in bribes.

Prosecutors had initially sought the confiscation of a total of 781.4 billion Korean won by applying the Conflict of Interest Prevention Act. However, the court acquitted them of this charge, and the prosecution's abandonment of the appeal has made it nearly impossible to recover the remaining 734.1 billion Korean won.

Asset Preservation Measures

Previously, prosecutors secured the preservation of approximately 207 billion Korean won in assets belonging to the Daejang-dong group for confiscation. This included 125 billion Korean won from Kim Man-bae, 51.4 billion Korean won from Nam Wook, and 25.6 billion Korean won from Jeong Young-hak. These measures were taken to secure assets in anticipation of a court order for confiscation following the criminal trial.

However, with the prosecution abandoning its appeal, there are observations that the preservation measures could be lifted. The likelihood of a confiscation order exceeding the 47.3 billion Korean won recognized in the first trial has nearly vanished.

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