SEONGNAM — Seongnam Development Corp. is expanding legal action against Kim Man-bae, a central figure in the Daejang-dong development scandal, in an effort to recover public assets.
The agency said on the 16th that it will file a lawsuit with the Seongnam Branch of the Suwon District Court seeking to void a fraudulent conveyance involving 2.2 billion won ($1.5 million) that Kim transferred to his spouse. The agency believes the money was used to purchase land in Suwon's Gwonseon District.
A fraudulent conveyance suit seeks to cancel and reverse a transaction in which a debtor transfers or disposes of assets while aware that doing so could harm creditors and make debt collection more difficult. Under civil law, such a suit must be filed within one year of learning of the grounds for cancellation and within five years of the transaction itself.
The agency is focusing on the fact that Kim transferred a large sum to his spouse at a time when he could be held liable for damages to the agency over the Daejang-dong project. It concluded that the transfer constitutes a fraudulent conveyance that obstructed the exercise of its rights as a creditor.
According to the agency, Kim transferred 2.2 billion won in funds from Cheonhwadongin No. 2 — an entity the agency believes he effectively controlled — to his spouse's account in October 2021, while prosecutors were conducting their investigation. His spouse then used the money in October 2022 to buy land in Suwon's Gwonseon District and completed the transfer of ownership registration in her own name.
Prosecutors earlier indicted Kim and others on the view that the agency suffered about 489.5 billion won in financial damages, based on dividend income it should have secured through the Daejang-dong project. In the first criminal trial, with a ruling handed down on Oct. 31 last year, the court recognized that the agency had suffered damages and assessed the amount at about 112.8 billion won.
The latest suit, however, is not a proceeding to establish Kim's criminal liability but a civil measure the agency is pursuing to preserve its damage claims. The agency maintains that Kim bears liability of at least 112.8 billion won based on the damages recognized in the first criminal trial.
The agency is asking the court to cancel the gift contract with the spouse and order payment of the 2.2 billion won. It also applied for a provisional attachment of real estate of the same value to prevent the land from being sold while the case is pending.
The agency is also taking into account that the spouse served as an inside director of Cheonhwadongin No. 2. It believes she may have been in a position to know Kim's financial condition and debt situation.
Including the latest application for provisional attachment of the Suwon land, the agency has pursued 14 provisional measures on real estate to secure assets from those involved in the Daejang-dong case. The measures cover 18 properties with an estimated market value of about 100 billion won, based on the agency's own calculations.
The agency said it will continue tracking assets suspected of being held under borrowed names or concealed in connection with Kim and other defendants in the criminal case. For any assets identified, it plans to consider additional lawsuits, provisional measures and other legal steps as needed.
Shin Sang-jin, the mayor of Seongnam, has pledged in connection with the Daejang-dong preferential treatment allegations that the city will "take the measures necessary to protect assets that should go to Seongnam residents."