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President Lee's ties to Daejang-dong case weaken as prosecutors opt against appeal

Published: 10 Nov. 2025, 06:00 Updated: 10 Nov. 2025, 13:15

President Lee Jae Myung speaks during a national public forum at the National Science Museum in Daejeon on Nov. 7. [NEWS1]

President Lee Jae Myung's connection to the so-called Daejang-dong development case has significantly weakened as prosecutors decided to forgo an appeal on the district court ruling to acquit the defendants in a breach of trust case, thereby loosening the link between then-Seongnam city officials to the private sector.

The Daejang-dong development case centers on a public–private housing project in Seongnam, Gyeonggi, launched in the mid-2010s while President Lee was mayor of Seongnam. Prosecutors allege that a group of private developers earned excessive profits through insider deals, causing losses to the city.

In the Daejang-dong case, Lee was indicted on two counts: violations of the Act on the Aggravated Punishment of Specific Economic Crimes and Act on the Prevention of Conflict of Interest Related to Duties of Public Servants. Both charges resulted in acquittals in the trials of private developers. The court acknowledged that a breach of trust occurred in the development project but ruled that prosecutors failed to establish a loss exceeding 5 billion won ($3.4 million) — the threshold required to apply the Special Economic Crimes Act — because the court "cannot calculate a concrete acquisition amount,” according to the judges.

Under the Special Economic Crimes Act, breach of trust can result in life imprisonment or at least five years in prison. The same offense under the Criminal Act, however, carries a maximum sentence of 10 years or a fine of up to 30 million won. By dropping the appeal, prosecutors abandoned their chance to present a new calculation of losses, removing the risk of harsher sentences for the developers.

For Lee, the maximum possible penalty — if convicted — has now effectively fallen from life imprisonment to up to 10 years in prison.

“Legally speaking, the acquittal of other co-defendants doesn’t guarantee his innocence,” a former deputy chief prosecutor said. “But if related cases reach different conclusions, the next panel will have little choice but to follow the precedent.”

The Korean national flag and the prosecution’s flag flutter in the wind on a flagpole in front of the Seoul Central District Prosecutors’ Office in southern Seoul on Nov. 9. [NEWS1]

The Democratic Party, meanwhile, is pushing to abolish the breach of trust law under the Criminal Act. If the law is repealed during Lee’s ongoing case, the core charge that supported the first trial verdict could be dismissed or withdrawn by prosecutors.

The court also finalized the acquittal for the defendants on bribery charges related to the 42.8 billion won that prosecutors described as the link between private developers and Seongnam City Hall.

Prosecutors had accused Yoo Dong-gyu, the former acting president of the Seongnam Development Corporation, and Kim Man-bae, the major shareholder of asset management firm Hwacheon Daeyu, of promising to give 42.8 billion won to Jeong Jin-sang, former vice chief of staff to Lee.

The court, however, ruled that Kim agreed to provide 42.8 billion won from the Daejang-dong project’s profits to “Yoo’s side,” but determined that the money merely represented the distribution of illegal gains from the breach of trust, not a distinct bribery transaction.

Legal analysts say the prosecution’s decision not to appeal further weakens the link between Lee and the private developers.

The first court had written in its verdict that “Lee Jae Myung and Jeong Jin-sang appeared to have been briefed on how the private developers helped with Lee’s mayoral re-election campaign,” leaving open the possibility of Lee’s involvement. But prosecutors lost the opportunity to pursue that line of argument any further.

“The first trial identified Yoo Dong-gyu as the main perpetrator in the Daejang-dong breach of trust case,” a senior high court judge said. “By dropping the appeal, prosecutors have effectively accepted that conclusion.”

Yoo Dong-gyu, the former acting president of Seongnam Development Corp, speaks to the press as he arrives for the first-trial sentencing hearing at the Seoul Central District Court in southern Seoul on Oct. 31. [NEWS1]

The court also acquitted Lee on another key charge related to violating the Act on the Prevention of Conflict of Interest of Public Officials. The court ruled that the alleged misconduct occurred on Aug. 19, 2015, when the project's operator was selected, and that prosecutors had filed the indictment after the seven-year statute of limitations had expired.

Prosecutors argued that the conduct spanned from August 2014 to January 2023 and had sought to challenge that timeline on appeal, but the acquittal is now final. The conflict-of-interest charge had served as the basis for prosecutors’ request to seize 781.4 billion won in alleged criminal proceeds. With the acquittal confirmed, that recovery is no longer possible.

Legal experts say it is unprecedented for prosecutors to opt against appealing after major charges result in acquittals.

“I’ve never seen a case where prosecutors gave up an appeal after a partial acquittal,” said a lawyer who previously served as a senior judge. “I don’t think I’ve even seen them forgo an appeal to the Supreme Court. At this point, all prosecutors can do is try to prevent the sentence from being reduced or more acquittals from being handed down.”

A former prosecutor also said the decision was difficult to understand.

“Given the usual practice of appealing acquittals, this is hard to accept,” a former prosecutor said. “It may be that prosecutors took to heart President Lee’s criticism of their excessive appeals.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY CHOI SEO-IN [[email protected]]