Couple allegedly issued false tax invoices worth 26.6 billion won through shell companies; charged under aggravated punishment law

Kwon Oh-soo, former chairman of Deutsch Motors Group, arrives at Seoul High Court in Seocho-gu for a second-instance sentencing hearing in the share price manipulation case in September 2024. [Yonhap]
Kwon Oh-soo, former chairman of Deutsch Motors Group, arrives at Seoul High Court in Seocho-gu for a second-instance sentencing hearing in the share price manipulation case in September 2024. [Yonhap]

Prosecutors have indicted Kwon Oh-soo, chairman of Deutsch Motors Group, and his spouse on charges of issuing false tax invoices worth approximately 26.6 billion won ($19.6 million) through shell companies.

The Seoul Central District Prosecutors' Office tax crime investigation unit indicted Kwon and his spouse, identified only as A, without detention on Tuesday on charges of violating the Act on the Aggravated Punishment of Specific Crimes in connection with the issuance of false tax invoices.

According to prosecutors, the couple established three companies under borrowed names — including two shell companies — to monopolize profits from showroom and interior construction projects commissioned by the group. Between 2017 and 2021, they allegedly steered approximately 107.9 billion won worth of group construction contracts to those three firms, exchanging false tax invoices and evading gift taxes in the process.

Prosecutors believe that although a single construction company held under A's name carried out all the work, the couple set up two additional shell companies to create the appearance of competitive bidding for contracts with Deutsch Motors, making it seem as though some projects had been awarded to and executed by those shell companies. Prosecutors determined that Kwon issued and received false tax invoices worth approximately 6.2 billion won, while A issued and received invoices worth approximately 20.4 billion won.

Prosecutors also found that A evaded approximately 190 million won in gift taxes by registering shares in the three companies under the names of acquaintances of the couple — a method used to avoid gift tax liability arising from transactions between specially related corporations. A further 460 million won in taxes was allegedly evaded by having dividends paid to those nominee shareholders returned in cash, concealing the income.

The National Tax Service conducted a tax audit of Deutsch Motors and filed a complaint with prosecutors in April. The tax crime investigation unit then carried out a search and seizure at Deutsch Motors' headquarters in Seongdong-gu, Seoul, in May.

A spokesperson for the Seoul Central District Prosecutors' Office said the office would do its utmost to secure convictions, ensuring that those who undermine the tax order and threaten public finances face punishment commensurate with their crimes.

Kwon received a suspended sentence last year — three years in prison, suspended for four years — in connection with the Deutsch Motors share price manipulation case. A financier surnamed Son, identified as having played a role similar to that of Kim Keon Hee, the spouse of former President Yoon Suk Yeol, was also found guilty of aiding and abetting the share price manipulation and received a six-month prison sentence, suspended for one year.


bell@heraldcorp.com