Executives Involved in 'No-Capital Acquisition' of Medicox Receive Prison Sentences in Appeal, With Some Reductions

Executives who were sentenced to prison in the first trial for their involvement in the no-capital acquisition of KOSDAQ-listed company Medicox and the misappropriation of large sums of corporate funds have had their sentences reduced in the appellate court after being acquitted of some charges.

The 7th Criminal Division of the Seoul High Court (Presiding Judge Goo Hoe-geun) recently sentenced a vice chairman of Medicox, identified by his surname Lee, to seven years and six months in prison and a fine of 200 million won.

Another vice chairman, identified by his surname Park, who was indicted alongside him, was sentenced to three years and six months in prison and a fine of 100 million won.

These sentences represent a reduction from the first trial, where Lee was sentenced to eight years in prison, a 200 million won fine, and a forfeiture of 428 million won, while Park received four years in prison, a 100 million won fine, and a forfeiture of 62 million won.

While the appellate court upheld the majority of the charges recognized by the lower court, it ruled that the charge of breach of trust—specifically receiving 2 billion won in exchange for a request to acquire convertible bonds (CB)—was not guilty.

Consequently, the forfeiture orders imposed in the first trial were overturned in the appellate court.

The court accepted the defendants' argument that the charge of breach of trust did not constitute a separate crime.

The court stated, "Transactions such as the acquisition of convertible bonds were not based on illicit solicitation but were merely part of the defendants' planned structure for breach of trust," adding, "Since they are already being punished for breach of trust, they cannot be punished again by treating the same act as a reward for illicit solicitation."

The defendants were indicted in July of last year along with two chairmen for their roles in the no-capital acquisition of Medicox, the subsequent siphoning of corporate funds for personal gain, and the filing of false public disclosures.

Investigations revealed that in November 2021, the two vice chairmen fabricated a transaction in which the company appeared to purchase Medicox shares—which they had received for free from a real estate development firm—for 5 billion won. They then used these siphoned funds to pay for a third-party paid-in capital increase, falsely reporting it as a legitimate capital raise.

They were also charged with causing financial loss to the company by acquiring 5 billion won worth of convertible bonds from a real estate developer that did not need to be acquired, and then receiving 2 billion won in return to split among themselves. Additionally, they were charged with causing loss to the company by forcing it to acquire 4.1 billion won worth of Lee's unlisted stocks.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.