Hyosung scion indicted for embezzling $5.5M

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Hyosung scion indicted for embezzling $5.5M

The prosecution charged Cho Hyun-joon and Cho Hyun-sang, the first and the third sons, respectively, of Cho Suck-rai, chairman of Hyosung Group, without detention yesterday.

The charge against Cho Hyun-joon, the head of the Textile and Trading Performance Groups at Hyosung, is that he embezzled $5.5 million worth of the company’s money to purchase U.S. real estate.

The charge against Cho Hyun-sang, the executive director of Hyosung, was that he violated the Foreign Exchange Trade Laws.

According to the prosecution, Cho Hyun-joon embezzled a total of $5.5 million in four batches between 2002 and 2005. He also took out a loan worth $5.2 million from a U.S. bank.

With the money he embezzled and borrowed, Cho purchased six luxury mansions and condos in the U.S., a mansion in Newport Coast, a luxury condo in San Francisco, another condo in West Hollywood, as well as luxury condos in Honolulu.

The prosecution alleged that Cho spent a total of $11.7 million for the real estate, including commissions.

In Hyosung’s accounts, the $5.5 million is described as a loan and money paid in advance to Cho.

Prosecutors also said that Cho paid back the money he embezzled from the company with interest, which amounted to $6.4 million, between 2003 and 2006.

“Even if you pay back the money you borrowed from a company, if the money was used for a personal purpose, it is still considered embezzlement,” said the prosecutor, Kim Ju-hyeon.

In December last year, Cho Hyun-joon was also indicted for violating the Foreign Exchange Trade Law. He purchased two luxury villas in San Diego in January 2007, but did not report it to the Finance Ministry.

The third son, Cho Hyun-sang, is also indicted for violating the Foreign Exchange Trade Law. He purchased a luxury condo in Hawaii worth $2.62 million in August 2008, but did not report it to the ministry.

“The money I used to purchase the condo came mostly from what I saved and invested when I was living abroad and partially from what I borrowed from U.S. banks, not the money I transferred from Korea,” Cho Hyun-sang told prosecutors during the investigation.

Since last October, the prosecution has been cooperating with the U.S. Department of Justice to collect and investigate data related to the real estate purchases.

By Lee Chul-jae [enational@joongang.co.kr]
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