Individual investors who suffered significant financial losses after investing in corporate bonds issued by JTBC and Central Group have filed a collective criminal complaint against the group's executives and the financial companies involved in the issuance and sale of these bonds.
On September 9, the joint legal team representing the victims held a press briefing at the Seoul Bar Association in Seocho-dong, announcing that they had filed complaints against 20 individuals, including executives from Central Group and its affiliates, for violations of the Capital Markets Act with the Seoul Southern District Prosecutors' Office.
The complaint includes 319 individual investors who invested in the public corporate bonds of JTBC and Central Daily, as well as short-term electronic bonds based on these assets. The objectively verified losses amount to at least 32.5 billion won.
Among the defendants are Hong Seok-hyun, chairman of Central Holdings; Hong Jeong-do, vice chairman of Central Group; and Hong Jeong-in, CEO of Contentree Central, along with other executives from Central Holdings, JTBC, and Central Daily. Additionally, Shinhan Investment Corp., Hanyang Securities, Kiwoom Securities, and JNS Investment Management, along with their employees responsible for securities issuance, distribution, and asset management, are also accused of fraudulent trading.
The legal team pointed out that Central Group inflated its financial statements by using hybrid capital securities for inter-affiliate fund recycling and failing to account for losses on uncollectible bonds.
Central Group allegedly expanded its apparent capital by having one affiliate acquire hybrid capital securities from another affiliate at risk of capital erosion, subsequently raising funds from individual investors in the market. However, the funds raised did not remain with the issuing company but were diverted to other affiliates, and losses on uncollectible bonds were concealed by not setting aside provisions for bad debts, according to the legal team.
As a representative example, the legal team cited the acquisition of 74 billion won in hybrid capital securities issued by JTBC by Central Holdings and Dabo Central in 2024. This allowed JTBC to artificially inflate its capital on paper, creating an appearance of financial soundness, but the funds were not used for JTBC's operations and were instead invested in or loaned to other affiliates, such as Studio Aye Central and Phoenix Sports. Consequently, JTBC was left with only interest and repayment burdens while the actual funds flowed out to other affiliates.
The imbalance in accounting evaluations was also highlighted as a serious issue. As of the end of 2025, major affiliates of Central Group reflected approximately 61% of the 1.068 trillion won invested in affiliates as losses, totaling 615 billion won.
In contrast, they did not set aside any provisions for the 740.5 billion won in loans and bonds extended to the same affiliates. While the stock values of these affiliates were assessed to have declined, the bonds were misrepresented as fully recoverable.
Based on these distorted financial statements, JTBC issued a total of 320 billion won in public corporate bonds across four tranches, of which 245 billion won in principal is currently in a state of default.
Lee Bok-hyun, a lawyer and former chairman of the Financial Supervisory Service, also attended the press conference, emphasizing that the complaint is not merely a result of individual companies' financial difficulties but is part of a coordinated plan at the group level.
He explained, "Looking at the overall cash flow of the group, there is a series of transactions where funds from the founding family are injected into the holding company and then flow into affiliate support and recovery processes. In the rapidly deteriorating funding environment since 2023, decisions to support funds across individual affiliate lines cannot occur without the involvement of the founding family and the group's CFO, who are the final decision-makers."
When asked about the jurisdiction and investigative authority regarding the case, he expressed regret that victims must form their own accounting analysis teams to uncover the facts, despite the case being a large-scale capital market crime with multiple victims. He requested that if direct investigation by the Seoul Southern District Prosecutors' Office is difficult due to the current judicial system structure, the case should be swiftly transferred to the Financial Supervisory Service's special judicial police, which has expertise in capital market crime investigations.
He particularly emphasized the necessity of the Financial Supervisory Service's special judicial police's involvement for effective investigations within the year, as there is a risk of delays exceeding one year if the case is transferred to the police or the Serious Crimes Investigation Unit.
Regarding the responsibility of the financial companies also named in the complaint, he stated that there is recognition of implied intent. He noted that the lead underwriters and distributors have been deeply communicating with the group's management while conducting bond issuance and investment banking activities for years, and they directly created and sold short-term liquidity products based on hybrid capital securities.
He asserted, "Financial investment businesses should act as 'gatekeepers' to resolve information asymmetry in the market, yet they have repeatedly drafted investment prospectuses indicating that repayment risks were manageable while earning substantial fees without disclosing the risks."
The legal team and victim representatives clarified that the ultimate goal is not merely to punish the defendants but to achieve substantial recovery of losses through accurate fact-finding and to urge responsible behavior from the management. They strongly requested that investigative agencies conduct swift searches and seizures to trace the flow of funds between affiliates and secure internal documents.
Earlier in June, JTBC declared a default of approximately 20 billion won, which triggered a ripple effect throughout the group. Subsequently, all affiliates of Central Group, including Central Daily, Central Holdings, and Megabox Central, applied for court rehabilitation procedures, marking the beginning of a financial crisis for Central Group.
Creditors have initiated legal actions against Central Group, its management, and the founding family, and the Seoul Bankruptcy Court has decided to commence legal rehabilitation procedures for five companies within Central Group. Notably, JTBC has been ordered to submit a detailed rehabilitation plan by January 29 of next year.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.