[Edaily Reporter Seong Ga-hyun] Cho Young-tak, CEO of IMS Mobility, who was accused of embezzling investment funds alongside Kim Ye-seong—known as the so-called “butler” to First Lady Kim Keon-hee’s family—was acquitted in his first-instance trial.

The 21st Criminal Division of the Seoul Central District Court (Presiding Judge Jo Sun-pyo) held a sentencing hearing on the afternoon of the 12th for CEO Cho, who was charged with violations of the Act on the Aggravated Punishment of Specific Economic Crimes, among other charges, and acquitted him. The court dismissed the special prosecutor’s indictment on some of the charges.

CEO Cho is considered a central figure in the “Butler Gate” scandal, along with Mr. Kim, who was identified as the butler for Mrs. Kim’s family. The scandal centers on allegations that IMS Mobility—a company Mr. Kim helped establish—received approximately 18.4 billion won in investments from nine major corporations, including Kakao Mobility and #HS Hyosung, as well as financial and securities firms, in June 2023 while in a state of capital impairment, by leveraging its close relationship with Mrs. Kim.

However, as the special prosecution team was unable to establish a direct link to Mrs. Kim, CEO Cho was ultimately indicted on charges of embezzling approximately 3.5 billion won and committing breach of trust amounting to approximately 3.2 billion won during the process of securing investments from multiple companies and using a portion of those funds to repurchase the company’s existing shares.

In addition, CEO Cho was charged with pressuring Mr. Kang, a reporter for a business newspaper, to write favorable articles about the company and providing him with gift certificates and corporate credit cards worth 84 million won in return. He is also accused of instructing someone to hide a computer just before a search and seizure.

Regarding the paid-in capital increase that IMS Mobility conducted for its subsidiary, the court explained, “It is difficult to conclude that CEO Cho and others breached the duty of good faith by engaging in acts prohibited by law,” adding, “It is also difficult to conclusively determine that the paid-in capital increase caused a loss because the subsidiary’s shares had no value, nor is it easy to conclude that there was intent.”

The court also ruled that CEO Cho had no intent regarding the charges of violating the Act on External Audits of Corporations, etc. Regarding the charge of instigating the concealment of evidence, the court acquitted him on the grounds that the IMS Mobility director, who was also indicted on the same charge, had hidden the PC in the trunk of a vehicle on his own initiative, and that CEO Cho had not ordered the destruction of evidence.

Additionally, charges of embezzlement for the unauthorized use of company funds and charges of offering money or valuables to journalist Kang in exchange for favorable articles were dismissed on the grounds that they were not included in the scope of the special prosecutor’s investigation. The court explained, “The authority to file charges granted to the special prosecutor under the Special Prosecutor Act must be interpreted strictly,” adding, “A determination of reasonable relevance must be made by comprehensively considering factors such as similarity, homogeneity, and purpose in relation to the crimes under investigation.”

Meanwhile, Mr. Min, the CEO of Oasis Equity Partners, who was also indicted, was acquitted. The court dismissed the indictments against Ms. Jeong, the spouse of Mr. Kim Ye-seong—known as First Lady Kim Keon-hee’s butler—and against journalist Kang. However, a director surnamed Mo, who was charged with concealing evidence, was sentenced to a fine of 7 million won.