[BizHanKook] The illegal loan case involving Yoo Joon-won, CEO of Sangsangin Group, which has dragged on for nearly seven years, is nearing its appellate court sentencing. This comes approximately two years after the February 2025 first-instance ruling, which sentenced him to four years in prison and a fine of approximately 18.5 billion KRW. CEO Yoo and Sangsangin are also engaged in administrative litigation to overturn the order to dispose of their savings bank shares in connection with the issue of major shareholder eligibility. Furthermore, with the sale of Sangsangin Savings Bank’s shares being repeatedly delayed, both legal disputes and the divestment process are becoming protracted.
It has been confirmed that the sentencing date for the second trial of CEO Yoo Joon-won and executives and employees of Sangsangin and Sangsangin Plus Savings Bank, who were indicted on charges including illegal lending, has been set for January 13, 2027. This appellate ruling comes about six years and six months after the prosecution indicted them for violations of the Capital Markets Act, the Act on the Aggravated Punishment of Specific Economic Crimes, and the Mutual Savings Bank Act. As attendance is mandatory for appellate sentencing, CEO Yoo and the other defendants are expected to appear in court.
Previously, on February 18, 2025, the Seoul Central District Court, which presided over the first trial, sentenced CEO Yoo Joon-won to four years in prison, a fine of approximately 18.5 billion KRW, and ordered the forfeiture of approximately 112 million KRW. Sangsangin Savings Bank, also indicted, was ordered to pay a fine of 6.436 billion KRW and a forfeiture of 3.218 billion KRW, while Sangsangin Plus Savings Bank was ordered to pay a fine of 11.888 billion KRW and a forfeiture of 5.944 billion KRW.
The case revolves around high-interest collateralized loans provided by CEO Yoo Joon-won and Sangsangin-affiliated savings banks to KOSDAQ-listed companies. Between April 2015 and December 2018, the KOSDAQ-listed firms involved in the case publicly disclosed that they were raising investment funds through the issuance of convertible bonds (CBs). In reality, however, they were receiving high-interest loans from Sangsangin-affiliated savings banks.
The first-instance court noted, “It constitutes fraudulent and unfair trading for a convertible bond issuer to rely entirely on loans received after providing collateral to savings banks without disclosing the provision of such collateral,” adding, “Such fraudulent and unfair trading practices undermine the purpose of the disclosure system and damage market fairness and transparency.”
The court further ruled, “Sangsangin-affiliated savings banks appear to have designed the convertible bond issuance and loan structure and spearheaded the issuance and lending process. While operating the affiliated savings banks, CEO Yoo determined the convertible bond collateral loans and profits,” and concluded, “CEO Yoo and others designed the convertible bond issuance and loan structure and committed the crimes continuously to reap large-scale profits.” However, the court acquitted them of stock manipulation and breach of trust charges, citing a lack of evidence.
Sangsangin has been embroiled in legal battles regarding the illegal loan scandal. When CEO Yoo received heavy disciplinary action, including a three-month suspension from duty by financial authorities in December 2019, he filed an administrative suit to cancel the sanction, but lost in the Supreme Court in May 2023. Under the Act on Corporate Governance of Financial Companies, those who receive severe disciplinary actions like suspension cannot be appointed as an executive of a financial company for a certain period.
As the sanction was upheld by the Supreme Court and CEO Yoo lost his major shareholder eligibility under the Mutual Savings Bank Act, the Financial Services Commission ordered him to meet the eligibility requirements and issued an order to dispose of 90% of the shares in Sangsangin and Sangsangin Plus Savings Bank. CEO Yoo is the largest shareholder of Sangsangin (23.65%), and Sangsangin holds 100% of the shares in the two savings banks.
Sangsangin responded with an administrative suit to cancel the major shareholder qualification and share disposal orders but lost in the first trial in December 2024. Although the second trial is underway following Sangsangin’s appeal, no hearings have been held since last July. The effectiveness of the share disposal order remains suspended until 30 days after the final ruling on the merits of the case.
Meanwhile, attention is also focused on whether the stock purchase agreement surrounding Sangsangin Savings Bank will be fulfilled. In October 2025, Sangsangin signed a contract to sell a 90.01% stake in Sangsangin Savings Bank to KBI Group, which handles auto parts and industrial materials, for 110.7 billion KRW. The acquisition by KBI Group is led by Gumi-based waste disposal firm KBI Kookin Industry, which has a history of acquiring Raon Savings Bank.
However, the expected completion date for the sale continues to be pushed back. On the 2nd, Sangsangin announced that the expected date for the share disposal had been changed from November 2 to November 13. This is the sixth change since the original expected disposal date of March 31, 2026.
Regarding this delay, KBI Group stated, “We will continue the acquisition negotiations,” adding, “We are currently narrowing differences with Sangsangin on matters that require further discussion and will consult closely in accordance with future procedures.”