[Exclusive] “Lee Jun-ho, my husband”… Yoon Jung-hee, the Art of Accumulating 30 Billion Won
[Dispatch=Kim Ji-ho & Park Hye-jin] Actress Yoon Jung-hee (45) resides in Nine One Hannam in Hanam-dong. It is a luxurious 101-pyeong duplex. She purchased it in 2021 for 7.4 billion won in cash. Currently, properties in Nine One are traded at around 170 million won per pyeong.
Yoon Jung-hee debuted in writer Lim Seong-han’s drama “Dear Heaven” (2005). Since then, she appeared as a lead or supporting role in about ten works. She hasn’t made much from variety shows or commercials. Nevertheless, her assets are estimated to be in the 30-billion-won range.
Yoon Jung-hee’s husband is Lee Jun-ho (51). He is the former Head of Investment Strategy at Kakao Entertainment. He entered the entertainment industry with the backing of his former mother-in-law, writer Kim Soo-hyun, and accumulated wealth through his skills and strategies. He remarried Yoon Jung-hee in 2015.
‘Dispatch’ traced the wealth accumulation process of Yoon Jung-hee and Lee Jun-ho. With some appropriation, they paid the down payment for a luxury villa; they sold his wife’s company amidst some conflicts of interest and became asset owners by trading SM stocks with some insider information.
# Dear Hill!
On February 16, 2017, Yoon Jung-hee contracted for a luxury villa, ‘Hannam The Hill.’ The purchase price was 3.6 billion won. At the time, Yoon Jung-hee had been on hiatus for four years since the drama ‘Firstborn’ (2013).
On the same day, Lee Jun-ho established a production company, `Media Maker’ (now Baram Pictures), in Yoon Jung-hee’s name. He merely used his wife’s name, with Lee Jun-ho being the actual owner.
The couple didn’t have the financial capacity to buy ‘The Hill’ at that time. Yoon Jung-hee wasn’t working, and Lee Jun-ho was managing a company that didn’t even have enough operating funds and was under trial for violating the Capital Market Act.
However, they went ahead and purchased the 3.6-billion-won house. Did they have someone to rely on? They had a plan.
On February 21, 2017, Lee Jun-ho secured writer Kim Eun-hee. She is a leading writer in Korea. Baram Pictures, backed by Kim Eun-hee, started a (pre-planned) deal with CJ Entertainment.
On February 23, 2017, Baram Pictures signed a development contract with Studio Dragon. The terms included 100 episodes of Kim Eun-hee’s drama, and they received a first contract payment of 6.05 billion won for planning and development fees.
Then on February 28, 2017, Lee Jun-ho diverted 1.05 billion won from the development fees into Yoon Jung-hee’s account. Yoon Jung-hee used 900 million won from it as a down payment for ‘Hannam The Hill’.
Lee Jun-ho used the remaining 100 million won to repay personal loans. The 50 million won was used as operating funds for another company he managed (M Maker). They used the money given to develop a drama to buy a house and repay debts.
# Dear Kakao!
In February 2017, Baram Pictures was anchored at Studio Dragon but took the helm again in just two years. They reduced the 100-episode deal with ‘Studio Dragon’ to 60 episodes and switched the route to Kakao M.
Former CEO Kim Sung-soo played the ‘key’ role. In 2017, he was the CEO of CJ ENM, the year Baram Pictures signed a contract with ‘Studio Dragon.’ (At that time) he moved to Kakao in 2019 and began fiddling with the ‘Baram’ card again.
Kakao first executed a payment of 33.7 billion won to Baram. This included 13.7 billion won for development fees and 20 billion won as loans. Baram returned 4.7 billion won of it to ‘Studio Dragon.’ They refunded two-thirds of the development fees received for the 100-episode contract with writer Kim Eun-hee.
Baram Pictures used the remaining development fee received from Kakao to boost its size. They hired writer Park Hye-ryun for 7 billion won and PD Park Ho-sik for 2.6 billion won. The prosecution sees Kakao’s funds as being used to enhance Baram Picture’s value.
As for the 20 billion won loan, where was it used? Yoon Jung-hee, using the money borrowed from Kakao, entered in a capital increase of Kakao again. Yoon Jung-hee put in 12 billion won, and writer Kim Eun-hee put in 4 billion won as capital increase funds.
(As of November 22, 2023, when the prosecution conducted a search and seizure, the market value of Kakao Entertainment shares held by Yoon Jung-hee was estimated at around 33.6 billion won.)
# Dear Kim Sung-soo!
This is the Kakao economics. The money that went out from Kakao cycled back to Kakao through ‘Baram.’ (The money) that went out (from Kakao) returned as it was, yet Lee Jun-ho and Yoon Jung-hee became wealthy.
It’s worth focusing on Kim Sung-soo. He collaborated(?) with Lee Jun-ho since his CJ ENM days. Lee Jun-ho locked in writer Kim Eun-hee using CJ’s capital. The 7.7 billion won signing fee for Kim Eun-hee directly came from CJ.
Kim Sung-soo continued to funnel money to Lee Jun-ho even after moving to Kakao, executing the acquisition of Baram Pictures. Of course, writer Kim Eun-hee is definitely attractive. Yet questions remain about the value assessment and acquisition process.
For example, during the acquisition of ‘Baram,’ Kakao used a Hong Kong-based private equity fund, ‘Anchor PE,’ as a bridge. ‘Anchor PE’ purchased Baram for 40 billion won, and sold it back to Kakao. It is criticized as being close to a ‘parking contract.’
Baram Pictures had zero revenue over three years. Past performance wasn’t considered. Like a promised play, it was bought for 40 billion won and transferred to Kakao for 40 billion won. Experts in the market point out, “Kakao, while acquiring ‘Baram,’ inserted a foreign private equity fund in between to obscure the real owners (Lee Jun-ho, Yoon Jung-hee).”
Lee Jun-ho argued it was Kim Sung-soo’s plan. He told ‘Dispatch,’ “CEO Kim Sung-soo is a CJ ENM alum. When moving to Kakao, he brought many CJ alumni,” explaining, “We went through ‘Anchor PE’ to acquire (Baram) because of public scrutiny.”
# Dear Exit!
Lee Jun-ho still insists on his innocence.
“An accountant used the DCF method. They predicted future sales and converted it to present value. ‘Studio Dragon’ also used this trend when acquiring ‘Hwa & Dam’ and ‘Cultural Warehouse’.” (Lee Jun-ho)
However, ‘Hwa & Dam,’ which housed writer Kim Eun-sook, already had revenues. In the year of acquisition (2016), it generated a revenue of 10.4 billion won. The previous year’s revenue was 8.2 billion, and the following year, 21.3 billion won.
‘Cultural Warehouse,’ where writer Park Ji-eun and actress Jeon Ji-hyun were affiliated, had revenues of 42.7 billion won in 2016 when ‘Studio Dragon’ acquired it, with an operating profit of 2.5 billion won. Previous year sales were 34.9 billion won, with two consecutive years of profit.
‘Studio Dragon’ acquired ‘Hwa & Dam’ for 31.5 billion won and ‘Cultural Warehouse’ for 36.5 billion won. However, Kakao paid 40 billion won for revenue-less ‘Baram Pictures.’ Anomaly, indeed.
Lee Jun-ho contracted writer Kim Eun-hee with CJ’s funds. He hired writer Park Hye-ryun et al. with Kakao’s money. He established his company with development funds (from CJ) and expanded it with more funds (from Kakao).
And then, sold it back to Kakao. Yoon Jung-hee held 80% of Baram Pictures shares. Utilizing conglomerate capital and writer connections, they pocketed 32 billion won. (On top of that, they even participated in a capital increase with borrowed funds from Kakao.)
# Dear Insider!
Lee Jun-ho emphasized his capabilities to ‘Dispatch.’ “I gathered writers and directors, conducted the company sale, among other tasks. Are you saying all my efforts are worth 0 won?”
His capability is undebatable. But could he have achieved this without former CEO Kim Sung-soo, who was the CEO of CJ ENM in 2017 and Kakao Entertainment in 2019? He’s the ultimate decision-maker.
Lee Jun-ho cannot claim freedom from conflict of interest. At the time, he was the head of the Video Content Business and Investment Strategy at Kakao M, leading entertainment company M&As with Kim Sung-soo
Is Lee Jun-ho a buyer, or a seller? As a Kakao employee, he had to acquire Baram Pictures, while simultaneously, as Yoon Jung-hee’s husband, he had to sell Baram Pictures. Whose interest did he serve?
After receiving the payment for Baram Pictures, Lee Jun-ho provided former CEO Kim Sung-soo with two check cards. Linked to his accounts. Transactions made by Lee Jun-ho were then spent by Kim Sung-soo.
According to the prosecution, Kim Sung-soo spent 1.25 billion won over three years from that account. Purchasing high-priced artworks, diamond necklaces, etc., hinting at possible payback.
Lee Jun-ho explained, “(I) recommended a business investment to CEO Kim Sung-soo. The business failed during the pandemic, so I covered it with my card,” adding, “I paid back in this manner due to tax reasons.”
Still, questions remain. Attorney Bang Jung-hyun noted, “If compensation in the form of a settlement agreement was provided, one might avoid gift tax,” adding, “Timing and methods are suspicious.”
# Dear SM!
Lee Jun-ho is also a master of stocks. He profited lucratively with SM Entertainment. Once again, he utilized Yoon Jung-hee. He bought a massive amount of SM stocks (67,000 shares) in her name. By the end of 2022, the estimated value was roughly 4.8 billion won.
With his husband’s help, Yoon Jung-hee bought low and sold high. They purchased at around 70,000 won and sold at 130,000 won (February 17, 2023). They essentially bought at the bottom and sold at the peak, reportedly earning over 600 million won.
Following is a conversation between Lee Jun-ho and a securities company employee. It took place on February 17, 2023, the moment Kakao officially entered the SM acquisition battle.
Lee Jun-ho: In my wife’s account, SM. Please sell everything once it exceeds 132,000 won today. I don’t have time to sell myself…
OO Securities: Ah, 132,000 won?
Lee Jun-ho: Yes, yes. Sell well by watching the trading volume. Please handle it because I don’t have time to watch.
Lee Jun-ho was an insider in the SM acquisition. He was the Head of Investment Strategy at Kakao Entertainment, approximately aware of Kakao’s plans. Interestingly, on the day he said to “sell everything,” Kakao entered into massive purchases through ‘One Asia.’
In response to insider trading suspicions, Lee Jun-ho dismissed them, “I have been buying SM stocks looking at its future long ago,” questioning back, “The prosecution scrutinized all my accounts, wouldn’t they have prosecuted me if there was an issue?”
Yet, the industry holds a different view. An entertainment industry insider stated, “Lee Jun-ho knew better than anyone about Kakao’s interest in SM,” adding, “He actually suggested buying to close acquaintances saying, ‘Kakao will jump in.’
# Dear Prosecution!
Is Lee Jun-ho lucky with prosecutors? The prosecution accused him of ① breach of duty and ② bribery. But failed to prove the scale of the breach. Unable to present Kakao’s loss as evidence.
The court acknowledged the existence of a breach act. After all, Lee Jun-ho is a special relation to Baram Pictures. Under Kakao’s ethical standards, he should have been excluded from the acquisition process involving his wife’s company (Baram).
“Lee Jun-ho violated Kakao Entertainment’s ethical standards. While directly conducting the acquisition negotiations as a seller, he oversaw the acquisition procedure as the practical leader of (Kakao). CEO Kim Sung-soo knew but did not take action.” (Court)
However, the prosecution couldn’t prove monetary damage to Kakao. The court stated, “(The prosecution) failed to present objective evidence supporting that Baram Pictures’ real value didn’t reach 40 billion won,” thus dismissing the breach charges.
It reiterated that suspicion alone cannot render a guilty judgment.
“(The explanations provided by Lee Jun-ho) about the reason for giving 1.25 billion won are not believable. One suspects if it is related to the Baram Pictures acquisition. However, there is no supplementary evidence from the prosecution solid enough to turn suspicion into conviction.” (Court)
Further stating, “Lee Jun-ho’s claims or defenses have contradictions and ambiguities, inciting suspicion of guilt,” but reaffirmed, “Nevertheless, criminal facts require strict evidence. The prosecution’s proof has not been sufficient.”
Lee Jun-ho was found guilty of embezzlement charges. The court concluded he used the development fees provided by ‘Studio Dragon’ for purchasing ‘Hannam The Hill’ and repaying personal loans, which is clearly embezzlement. He was sentenced to two years in prison, suspended for three years of probation.
“Lee Jun-ho used funds deposited by Studio Dragon for drama planning and development to purchase ‘Hannam The Hill’ and repay personal loan debt. It was used for private purposes unrelated to company operations or activities.” (Court)
Meanwhile, the prosecution filed an appeal on the 2nd, and Lee Jun-ho’s side also submitted an appeal on the 10th.