Allegations that Yoon Hong-geun, chairman of Genesis BBQ Group, diverted about 1.7 billion won in company funds to pay the U.S. study-abroad expenses of his children have ended, eight years after police and prosecutorial investigations began, with a final decision of non-indictment. The decisive reason for the prosecution decision not to indict was that the employee who first reported the allegations disappeared to the United States and later changed the account to say “it was a false report.”

According to the legal community on the 3rd, Criminal Division 1 of the Seongnam Branch of the Suwon District Prosecutors Office (Chief Prosecutor Kim Myung-ok) issued, on May 7, a non-indictment for all charges against Chairman Yoon of embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes and embezzlement in business under the Criminal Act.

From January 2010 to October 2016, Yoon was suspected of funding his children study abroad by paying about $773,000 (then about 873 million won) in salaries to employee A of the secretariat of the Korean subsidiary of BBQ and to the spouse of A, as if they were employed by the U.S. subsidiary. There was also a suspicion that from January 2013 to August 2016 he paid about 293 million won in company funds to a private tutor for his son under the pretext of salary from the Korean subsidiary, thereby covering part of the tutoring fees.

In October 2018, A reported to the police that, on the instructions of Yoon, money was siphoned off to cover his children study-abroad expenses and tutoring fees. The investigation began in earnest when police raided BBQ headquarters in December that year. After summoning Yoon three times for questioning in March 2019, the police, in June of that year, transferred the case to the Seoul Central District Prosecutors Office with an opinion to indict without detention, under the then system of forwarding all investigated cases to prosecutors. Initially, the police considered seeking an arrest warrant but, based on accounting analysis, decided not to apply because they judged that Yoon had reimbursed the company for the amount embezzled.

The Seongnam Branch, which has jurisdiction over the residence of Yoon, took over the case in August 2019. In July 2020, the Seongnam Branch concluded that evidence was insufficient for the allegation that Yoon diverted about $493,700 (then about 557 million won) under the guise of salary from the U.S. subsidiary for the younger brother of Yoon, and issued a non-indictment. For the remaining allegations, it entered a suspension due to an unlocatable key party because A departed for the United States immediately after the police tip and has remained there. This suspension is a temporary halt to an investigation when the whereabouts of a key party to the case are unclear.

The reasons the prosecution temporarily suspended the investigation were that Yoon firmly denied the allegations and, in December 2019, A changed the position by stating “in fact, I took money from a competitor of BBQ and made a false report.” From the United States, A sent a written statement through the attorney for Yoon asserting that “I and my spouse actually worked for the U.S. subsidiary, and Yoon remitted the study-abroad expenses of his children from personal funds.”

As the ten-year statute of limitations for embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes approached, the prosecution reopened the case in March last year. In a statement again submitted through the attorney for Yoon in December of that year, A claimed that “I kept in contact with a competitor, filed a false report, and cut and pasted materials for submission.” When A still did not return to Korea this year, the prosecution, just before the statute of limitations expired, finally disposed of the case by finding no suspicion regarding Yoon.