Lee Seung-gi’s father-in-law gets 3 years, 6 months in prison for KOSDAQ stock-price manipulation

The 'Pearl' trap that disrupted capital markets: Organized market manipulation leaves retail investors hurt

The father-in-law of singer and actor 'Lee Seung-gi' was sentenced to prison by a trial court for allegedly manipulating the share price of a KOSDAQ-listed company and pocketing massive illicit gains. The judiciary handed down a stern punishment for a serious crime that undermined the integrity of the capital market and harmed numerous innocent investors.

The Seoul Southern District Court’s Criminal Division 15, headed by presiding judge Noh Yoo-kyung, held the first sentencing hearing on the 29th for 13 people, including Lee, 59, who were indicted on charges including violations of the Capital Markets Act. The court sentenced Lee to '3 years, 6 months in prison' and 'a 400 million won fine'. It also ordered him to forfeit about 125.5 million won. The court said in explaining the sentence, "The defendants’ market-manipulation activities seriously distorted the market’s price-discovery function" and were "a textbook example of a capital-market crime that undermines investors’ trust and willingness to invest."

Lee and his associates carried out their scheme with precision and boldness. They deceived the market by claiming that KOSDAQ-listed companies were pursuing new businesses based on advanced technology, a so-called 'Pearl.' For about a year beginning in November 2022, they repeatedly placed orders to manipulate the share price of secondary-battery materials company 'Jungang Advanced Materials', driving it from 490 won per share to 5,850 won — an increase of more than '10-fold.' They also inflated the share price of renewable-energy company 'QuantaPia' by disclosing a false investment commitment stating that an investment worth 100 billion won had been secured. They were found to have defrauded investors of tens of billions of won through the scheme.

Investigators also uncovered signs of another crime that grew out of the scheme. After trading in QuantaPia was suspended in February 2024, Lee allegedly gave former prosecution investigator Lee, 61, an upfront fee of 30 million won and promised a success fee of 1 billion won to resolve the situation. He was charged with violating the Attorney-at-Law Act. The court, however, acquitted Lee on that charge, saying, "There is considerable room to view the payment as an act of passing money on to another defendant, rather than compensation that he intended to obtain in exchange for influence-peddling."

The actions of the former investigator identified as the mastermind behind the case add to its seriousness. He was found to have orchestrated the scheme to raise funds for the overseas escape of Lee In-kwang, chairman of Esmo and the mastermind of the 'Lime scandal.' Considering the seriousness of the crime, the court sentenced him to '10 years in prison' and 'a 24 billion won fine', and ordered him to forfeit about 6.014 billion won.

The court also acquitted the two men of charges that they attempted to manipulate the market by spreading a false rumor that SIM-card manufacturer 'XQure' was pursuing an AI robotics business. The court said, "The evidence submitted is insufficient to establish with confidence that the crime was carried out."

The case is also sending significant ripples through the entertainment industry. 'Lee Seung-gi' married Lee Da-in, the daughter of actor Kyun Mi-ri, in 2023. But as allegations of financial crimes involving his in-laws intensified, he drew a line between himself and his father-in-law’s illegal conduct in April last year, appealing, "Please leave my family alone," and effectively declaring a 'severance of ties.'