Radical action needed to prevent recurrence of Optimus case
A Seoul court sentenced the CEO of Optimus Asset Management, who was at the center of a massive investment fraud, to 25 years in prison Tuesday in one of the country's largest fund scams. The Seoul Central District Court found Kim Jae-hyun guilty of fraud and embezzlement and gave him a jail term well below the term of life imprisonment sought by prosecutors. He was also slapped with a fine of 500 million won ($434,000), along with 75.1 billion won ($65.3 million) in forfeiture.
Lee Dong-yeol, the company's second-largest shareholder, and Yoon Seok-ho, an executive, were each sentenced to eight years in jail after being found guilty on the same charges. The court ruled that most of the charges leveled against the defendants were proven.
The Optimus scandal centered on allegations that the private equity company took in about 1.3 trillion won ($1.13 billion) from thousands of investors by promising them that the money would be invested in public institutions. However, most of it was funneled into risky assets, causing huge losses to the investors. Along the way, Optimus executives audaciously fabricated documents and even hid computers to cover their tracks.
Most lamentable, hoever, is that the huge losses might have been avoided had the Financial Supervisory Service (FSS) done its job properly. The Board of Audit and Inspection discovered that Optimus had added a contradictory appendix allowing it to invest in corporate bonds, while reporting that it was investing over 95 percent in asset-backed securities of public institutions, but the FSS did not bother to demand corrections.
What irks the public is that law enforcement has been dragging its feet on the scam, despite suspected connections between Optimus and retired ranking government officials and politicians who acted as advisers to the company. The prosecution's investigation into a presidential aide has also been stalled. Law enforcement agencies should get to the bottom of the scandal to punish all those involved in this unprecedented investment scam. It's also necessary to overhaul the country's fund investment system to prevent any recurrence of such a fraud.