Lee Suman Models for Securities Firm Despite His Criminal Record of Large-Scale Securities Fraud
The article below details SM Founder and Director Lee Suman’s criminal history. He committed securities fraud of over 10 billion KRW (approximately 10 million USD) by siphoning off company funds. When official investigations began, he fled Korea. He returned after one year and was found guilty on all charges, and received a two-year jail sentence. That sentence was then delayed, and he eventually received a special pardon from the President of Korea.
Lee Suman is now the model in an advertisement by a securities firm named KB Investment Securities. That a criminal who was convicted of a multimillion-dollar securities fraud is the model for a securities firm has created some controversy.
KB Investment Securities New Model Lee Suman. Talks Abound Regarding His Securities Fraud
In 2004, Siphoned Off Company Funds in a Recapitalization – “Guilty” Verdict
KB Says: “No Problem… A Few JYJ Fans Raised the Issue.”
It has become known that Lee Suman, who is the director of SM Entertainment and has been appointed as the advertisement model for KB Investment Securities, has a criminal record, having committed a crime relating to securities. There are remarks that point out that the fact of having appointed an individual with a conviction of securities fraud in an advertisement for a securities firm is enough to generate controversy. But the firm takes the position that there is no problem.
According to the securities industry, KB Investment Securities launched a TV advertisement starting this month that has Director Lee has the model.
In the advertisement, along with a video of the collaborative performance of SNSD, Shinee, TVXQ and such in Paris as proceeded by SM Entertainment, is a narration by Director Lee that reads: “A true investment is something that, with a long-term outlook of ten, twenty years, creates something that cannot be imagined.”
It was relayed that Director Lee received about 300,000,000 KRW (approximately 300,000 USD) as appearance fee for the advertisement, and that he plans to donate 100,000,000 KRW (approximately 100,000 USD) to Centre Culturel Coréen.
KB Investment Securities explained the background behind appointing Director Lee as its model: “The image of the securities firm that recommends a long-term investment and the image of the director of the entertainment industry that raises stars with a long-term outlook matched.”
Despite this, the past criminal history of Director Lee is enough fodder for controversy.
When in 2003 the Violent Criminals Division of the Seoul District Public Prosecutors’ Office set out to investigate the charge of Director Lee having siphoned off 1,150,000,000 KRW (approximately 1,150,000 USD) of company funds in the process of the company’s recapitalization and purchased the company’s stocks (for himself) and thus raised a profit from the difference from the market price amounting to several hundred billions of KRW (approximately several tens of millions of USD) for himself, Director Lee fled overseas.
At the time, the Prosecutor’s Office revealed that in 1998, Director Lee realized that Korea Securities Dealers Association’s regulations would be soon amended to disallow capital increase of over 100% of the owner capital and so immediately prior to the amendment he siphoned off company funds in a hurry to do a recapitalization and thus increased the capital from 50,000,000 KRW (approximately 50,000 USD) to 1,200,000,000 KRW (approximately 1,200,000 USD).
Furthermore, Lee Director playing golf in an American golf course during his flight abroad was revealed to the press and has received the criticism of the public.
In the end, Director Lee returned to Korea after one year of fleeing overseas and was prosecuted. The trial of September 2004 turned in guilty verdicts for all charges and he was sentenced two years in prison and three years of probation.
On this, the justice department revealed that, in considering that Director Lee re-deposited the siphoned-off funds back to the company account and the fact that the capital increase for the company indeed took place, the carrying-out of the sentences will be delayed.
After this, in February 25 of 2007, he got his name on the Special Pardon list for the fourth anniversary of President Noh Muhyun’s inauguration (and was pardoned), receiving the criticism of citizen organizations and the legal community as having received justice amounting to a “cotton-stuffed rod” (T/N: equivalent to the expression “slap on the wrist”).
As the above facts are becoming known, the citizens who have seen the advertisement of KB Investment Securities that Director Lee appeared in have not been able to hide their bitterness.
A citizen asked back: “That a person who has committed a securities fraud models for a securities firm—it is ridiculous. The image of someone who, despite having committed a crime, lords over all and lives well—is that the image that the securities firm wishes to pursue?”
On such criticisms, KB Investment Securities takes the position that even though they knew of Director Lee’s criminal history, there are no big problems.
An affiliate of KB Investment Securities explained: “We were cognizant of the fact of Director Lee’s related offense. However, he was pardoned long ago. And we will focus on the fact that he has drawn a European Wave of the Korean Wave and will only be exposed for a limited time until September in the firm’s image-making advertisement.”
He also added: “It seems that some JYJ fans who have complaints against SM Entertainment are raising issues with Director Lee’s past with motives that are not innocent. As the advertisement itself does not recommend investing or promote products, we feel that there are nothing that can be problematic here.”
Source: Seoul Finance
Translation Credit: JYJ3