Seoul, South Korea – The reinvestigation into First Lady Kim Keon-hee's alleged involvement in the Deutsch Motors stock manipulation scandal has uncovered a trove of new evidence, including recorded phone calls that suggest her awareness of the scheme. This development has intensified criticism against the Seoul Central District Prosecutors' Office (SCDPO) for its initial four-year investigation, which critics argue was deliberately deficient and aimed at clearing Kim Keon-hee of all charges.
The Initial Flawed Investigation
According to legal sources on June 18, the Anti-Corruption Investigation Division 2 of the Seoul Central District Prosecutors' Office, which handled the Deutsch Motors case from 2020, reportedly failed to secure crucial phone call recordings from Kim Keon-hee's Mirae Asset Securities account. This omission is particularly glaring given that the current Seoul High Prosecutors' Office, which launched a reinvestigation in April, swiftly obtained hundreds of these very recordings by raiding Mirae Asset Securities.
The initial investigation team reportedly justified their failure to secure these recordings by claiming that Kim Keon-hee had placed stock orders via Home Trading System (HTS), not by phone, for her Mirae Asset account. Therefore, they only reviewed transaction records and did not pursue the call logs. They reportedly only obtained recordings from other brokerage firms, such as DS Investment & Securities, where Kim Keon-hee was known to have placed orders by phone. The SCDPO concluded in October of last year that there was insufficient evidence to prove Kim Keon-hee's involvement and cleared her of the charges.
However, this explanation has been met with skepticism. Legal experts point out that even if orders were placed via HTS, communication between a client and a securities firm often involves verbal consultations or confirmations that would be recorded. The fact that the Seoul High Prosecutors' Office, under Chief Prosecutor Cha Soon-gil, managed to uncover a substantial amount of call recordings from Mirae Asset Securities in a relatively short period, casts a long shadow over the thoroughness and intent of the SCDPO's initial probe.
Damning New Evidence
The newly acquired audio files, spanning approximately three years from 2009, reportedly contain hundreds of conversations between Kim Keon-hee and Mirae Asset Securities employees. These recordings allegedly include highly incriminating statements, such as Kim Keon-hee discussing entrusting her accounts to the "Black Pearl Invest group" and agreeing to give them 40% of the profits. More damning still, some recordings reportedly feature Kim Keon-hee explicitly stating that "they [the Black Pearl Invest group] are managing the stock price."
These revelations directly contradict the SCDPO's previous assertion that there was no evidence of Kim Keon-hee's awareness of the stock manipulation. The "Black Pearl Invest group" refers to the alleged core perpetrators of the Deutsch Motors stock manipulation scheme, including Kwon Oh-soo, the former chairman of Deutsch Motors, and other financial players. Their modus operandi reportedly involved manipulating stock prices through a series of wash trades and artificial price inflation.
On June 17, the reinvestigation team summoned a key figure, identified only as Mr. Kim, who allegedly played a central role in the second phase of the stock manipulation. During his questioning, prosecutors reportedly played him the newly secured audio files to ascertain Kim Keon-hee's prior knowledge of the scheme. Mr. Kim reportedly stated that he was "unaware of the existence of these recordings" and suggested that if a 40% profit-sharing agreement was in place, it was highly probable that principal guarantees and collateral were also provided, further indicating a deep level of involvement.
Wibro Egg and Evidence of Direct Complicity
Adding another layer of suspicion, prosecutors have also reportedly secured a voice recording of Kim Keon-hee mentioning a "stock-use Wibro Egg" to a securities firm employee on the very first day she placed an order through Mirae Asset. A Wibro Egg is a portable wireless router. In the context of stock manipulation, such devices are known to be used to obscure IP addresses and evade tracking by authorities. This detail suggests that Kim Keon-hee might not have merely been aware of the manipulation but actively participated in efforts to conceal it.
Legal analysts are interpreting this Wibro Egg mention as a strong indication that Kim Keon-hee was not just a passive investor but an active participant in the scheme, taking steps to avoid detection. This potentially elevates her alleged role from a passive beneficiary to an active accomplice.
Failure to Secure Warrants and Mounting Criticism
Compounding the controversy, it has also come to light that the Seoul Central District Prosecutors' Office did not request any search and seizure warrants specifically targeting Kim Keon-hee's personal assets or accounts in connection with the Deutsch Motors case. While warrants were sought for her company, Covana Contents, in relation to allegations of illegal corporate sponsorships, no such aggressive investigative measures were pursued for the Deutsch Motors scandal.
Lee Chang-soo, the former chief prosecutor of the Seoul Central District Prosecutors' Office, attempted to defend the office's actions during last year's parliamentary audit, stating that the two cases were investigated concurrently and that the Deutsch Motors allegations were even included in the same warrant applications. However, this explanation has done little to quell the mounting criticism of a perceived "lame-duck" investigation.
The renewed focus on the Deutsch Motors case, fueled by the Seoul High Prosecutors' Office's successful uncovering of critical evidence, has led to widespread calls for accountability within the prosecution service. Critics argue that the initial investigation's shortcomings, coupled with the new evidence, suggest a deliberate attempt to shield the First Lady from legal repercussions. The public is now demanding a thorough and impartial investigation to determine the extent of Kim Keon-hee's involvement and to hold accountable those who may have obstructed justice.
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