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 owners 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 conference at the Seoul Bar Association in Seocho-dong, announcing that they had filed a complaint with the Seoul Southern District Prosecutors' Office the previous day against a total of 20 individuals, including the owners of Central Group and affiliated companies, for violations of the Capital Markets Act.
The complaint includes 319 individual investors who invested in the public corporate bonds of JTBC and Central Daily, as well as electronic short-term bonds issued based on these assets. The objectively verified amount of losses from transaction records is 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 three members of the owner family. The complaint also includes corporate entities such as Central Holdings, JTBC, and Central Daily, as well as current and former CEOs. Additionally, Shinhan Investment Corp., Hanyang Securities, Kiwoom Securities, and JNS Investment Advisory, which were responsible for securities issuance, distribution, sales, and asset management, are also accused of fraudulent trading.
The legal team pointed out that Central Group inflated its financial statements structurally by engaging in fund recycling among its affiliates using hybrid capital securities 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 on the books, 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 up provisions for bad debts, according to the legal team.
As a representative example, the legal team presented evidence that in 2024, Central Holdings and Dabo Central acquired 74 billion won worth of hybrid capital securities issued by JTBC. This allowed JTBC to artificially inflate its capital on the books and appear financially sound, 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.
Serious issues regarding accounting evaluations were also highlighted. 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, no provisions for bad debts were set for loans and bonds amounting to 740.5 billion won lent 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 remains in a state of default.
Lee Bok-hyun, a former chairman of the Financial Supervisory Service, also attended the press conference, emphasizing that this complaint is not merely a result of individual companies' financial difficulties but is executed under 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 owner family are injected into the holding company and then flow into support and recovery processes for affiliates. In the rapidly deteriorating funding environment since 2023, decisions to support funds across individual affiliate lines cannot occur without the involvement of the ultimate decision-makers, such as the owner family and the group's CFO."
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 this 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, the case should be swiftly transferred to the Financial Supervisory Service's special judicial police, which has expertise in capital market crime investigations, to exercise investigative authority.
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 handled by the police or transferred to the Serious Crimes Investigation Unit.
The legal team also stated that the financial companies involved bear culpability due to their negligent intent. They 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 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 of the criminal prosecution against the defendants is not merely punitive but to achieve substantial recovery of losses through accurate fact-finding and to urge responsible behavior from the management. They strongly requested prompt compulsory investigations, including tracking the flow of funds between affiliates and securing internal documents through swift searches and seizures.
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 owner family, and the Seoul Rehabilitation 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.
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