Lee Jung-jae Sued for Alleged Fraud in Takeover of Management Rights Case

Based on an August 10th report from New Daily, Kim Dong-rae, the CEO of RaemongRaein, the production company responsible for JTBC’s drama “Reborn Rich”, filed a complaint against Lee Jung-jae and former WYSIWYG Studios CEO Park In-gyu in June at the Seoul Gangnam Police Station. The complaint was for violating the Act on the Aggravated Punishment of Specific Economic Crimes (Fraud).

Kim’s supporters argue that Lee Jung-jae and Park In-gyu duped him with false promises of company expansion and shared leadership.

Kim’s legal representative stated that Lee Jung-jae and Park In-gyu had no intention or capability of developing RaemongRaein into a global drama production company or co-managing the company with the plaintiff. Nevertheless, they persistently deceived over a prolonged period in order to obtain the majority of shares from the plaintiff.

According to their claims, Lee Jung-jae and Park In-gyu deceived us into transferring our shares by promising that their acquisition of RaemongRaein’s shares would lead to considerable growth for the company. They assured us that they would acquire renowned management companies from domestic entertainment agency A and secure investment from a reputable U.S. entertainment agency B, taking advantage of Lee Jung-jae’s connections and influence.

It was also stressed by Kim’s side that Lee Jung-jae and Park In-gyu had agreed to jointly manage the company, as stated in the contract, which included a clause stating their commitment to “honestly communicating and running the business together in the future”. Nevertheless, when Kim opposed the acquisition proposal for Chorokbaem Media, they made efforts to exclude him entirely from the management team.

At present, Kim’s representatives claim that Lee Jung-jae and Park In-gyu approached him with the objective of engaging in “corporate raiding”and gaining control of RaemongRaein’s management rights.

Kim’s representatives claimed that Lee Jung-jae and Park In-gyu had acquired the management rights of RaemongRaein with the intention of conducting a “corporate raid.”They alleged that the two then proceeded to use RaemongRaein’s 20 billion won in cash to quickly acquire another listed company, Chorokbaem Media, which had been suspended from trading. These actions, according to Kim’s side, went against Lee Jung-jae’s initial promise to prioritize company growth and instead showed a singular focus on acquiring Chorokbaem Media.

Despite the allegations, Lee Jung-jae’s representatives denied them, asserting that they are baseless.

Lee Jung-jae’s representatives contended that there was no agreement to acquire a management company through Company A or to obtain investment from Company B as a prerequisite for Kim transferring the management rights.

In regards to the joint management, it was clarified by both parties that the initial agreement for common stock investment clearly outlined its intention as a ‘contract for the transfer of management rights’. Therefore, it is only Kim’s allegations that would hold any weight if he had been coerced into signing the contract, but as it was mutually agreed upon, his claims are deemed invalid.

Lee Jung-jae’s representatives also conveyed their exasperation, stating that they had no prior acquaintance with Kim before signing the contract and had only held two meetings afterwards. They have retaliated against Kim’s baseless allegations and deception with a countersuit.

The police, having received Kim’s complaint, have already finished their investigation with him and are now preparing to conduct investigations with Lee Jung-jae and Park In-gyu in the near future.

In March, RaemongRaein was acquired by “Artist United”, in which Lee Jung-jae holds the majority of shares, through a capital increase. As part of the acquisition, 5.24% of RaemongRaein’s shares were allocated to both Lee Jung-jae and Park In-gyu, while Artist United and K-Culture No.1 Association received 18.85% and 1.05% respectively, resulting in a total ownership of 30.37%.

Nevertheless, the conflict regarding control of management arose when Lee Jung-jae’s team initiated legal action for compensation and demanded a shareholders’ assembly be held, alleging that Kim had barred Lee Jung-jae and fellow actor Jung Woo-sung (a board member of Artist United) from involvement in RaemongRaein’s administration.

The information was sourced from “Wikitree”(https://www.wikitree.co.kr/articles/974483).