'$30 billion fraud' One Hundred CEO Cha Gawon is arrested and sent to prosecutors on suspicion of stealing $24.2 billion

The peak of a $30 billion-claimed fraud scandal that has sent shockwaves through the entertainment industry is now facing judgment in court. The CEO of the famous entertainment agency 'One Hundred Label,' 'Cha Gawon,' has been arrested and sent to the Seoul Central District Prosecutors' Office on fraud charges under the Act on the Aggravated Punishment of Specific Economic Crimes. Behind the glittering entertainment business, prosecutors allege there was a large-scale scheme to misappropriate money by dangling the 'intellectual property (IP)' of affiliated artists, along with a meticulous 'round-robin' method to keep debts being shuffled.

The ugly truth of an IP business that was all show: the whereabouts of the $24.2 billion advance and the trap of duplicate contracts

The Seoul Metropolitan Police Agency’s Wide-Area Investigation Unit’s Financial Crime Investigation Unit on the 7th transferred Cha, in custody, to the Seoul Central District Prosecutors' Office along with voluminous investigative materials to prove fraud. The crux of the case involves alleged deceptive conduct directed at Nomers, Inc. According to police’s investigation, Cha allegedly took a massive advance payment totaling '$24.2 billion' under the name of an entertainment celebrity IP business while having no actual capability or intent to carry out the business.

The scheme was bold and cunning. Even though Cha had existing contracts with other companies that were still valid, he allegedly pushed ahead with 'duplicate contracts' while fully concealing the earlier agreements. Having launched an entertainment venture amid a mountain of debt, he allegedly continued a Ponzi-like form of 'round-robin' repayment of existing obligations by using an alleged workaround known as contract-splitting, which investigators uncovered in detail during the probe.

The persistence of the investigative authorities also stood out. Earlier, in June, police applied for a detention warrant twice, only to hit a snag in the form of the prosecution’s demand for additional investigation. However, after painstakingly analyzing the voluminous bank account records and the complicated web of contractual relationships, police put forth a winning move by filing a third warrant last month on the 22nd. In the end, on the 3rd, the Seoul Central District Court granted the detention warrant on the spot at a substantive review, giving legitimacy to the investigation by deciding that there was a strong risk of evidence being destroyed.