Prosecutors indict stock manipulation ring

A group accused of manipulating stock prices, including a self-proclaimed real-life inspiration for the financial crime film "The Scam," a former brokerage executive, the husband of an influencer and a former professional soccer player, has been indicted by prosecutors.

The Seoul Southern District Prosecutors’ Office said Frisday that it had arrested and indicted three core suspects, including alleged ringleader Kim, 57, on charges including violations of the Capital Markets Act. Prosecutors said the group manipulated shares of Kosdaq-listed furniture company Duoback and earned at least 1.4 billion won ($1 million) in illegal profits.

Those indicted in custody also included Jeon, 56, a former department head at Daishin Securities, and wealthy investor Lee, 45. Six additional accomplices were indicted without detention or summarily charged, while another suspect who fled overseas has been placed on a wanted list.

According to prosecutors, Kim had long claimed to be one of the real-life figures behind “The Scam,” a 2009 movie about stock price manipulation. Prosecutors allege that Kim worked with Jeon and Lee to artificially inflate Duoback’s share price between January and April last year. Lee is the husband of influencer Yang Jung-won.

Investigators said the group used borrowed-name accounts, unregistered mobile phones and roughly 3 billion won in cash to carry out coordinated trades designed to create the illusion of heavy market activity and drive up the stock price.

Prosecutors believe the suspects traded about 28.9 billion won worth of shares while pushing Duoback stock from the 1,000 won range to an intraday high of 4,105 won, reaping illicit gains in the process.

Investigators said the group intentionally targeted a thinly traded stock that could be more easily manipulated through coordinated buying and selling. Prosecutors said the suspects later tried to drive the stock even higher to increase profits, but the scheme began to unravel after one accomplice abruptly dumped a large volume of shares, triggering a steep fall in the stock price.

The group allegedly later brought in a former K League player in an attempt to revive the rally.

Separately, prosecutors said the case marks the first instance of a market manipulation suspect voluntarily cooperating under the Capital Markets Act’s "leniency program" introduced in January 2024. The program allows reduced or waived punishment for insiders who report wrongdoing or assist investigators.


정동진 haedoji@donga.com