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Samsung Group heir <keyword id="804640" type="PERSON" weightage="20" keywordseo="Lee-Jae-yong">Lee Jae-yong</keyword> was indicted on Tuesday for his role in a controversial merger and alleged accounting frauds. Prosecutors charged Lee, the vice chairman of Samsung Electronics, with unfair trading, stock manipulation, breach of trust in relation to the 2015 merger between two Samsung affiliates seen as a key step toward his succession, and alleged accounting fraud at the pharmaceutical unit of Samsung Biologics, reports Yonhap News Agency. Ten other former and incumbent Samsung executives were also indicted on similar charges. The investigation team led by senior prosecutor Lee Bok-hyun said in a statement that they reached a conclusion that judicial judgment is necessary in the case, given "the clear-cut facts supported by evidence, the gravity of the case and the need to resolve the public's suspicions surrounding the case". Prosecutors suspect that Lee was involved in a company-wide scheme to plan the merger of Cheil Industries Inc. and Samsung C&amp;T and fraud in a way to take over control of the country's biggest conglomerate from his ailing father, Lee Kun-hee, who suffered a heart attack in 2014. He is also suspected of being part of the alleged plan to inflate the value of Samsung Bioepis, a joint venture between Samsung Biologics, a subsidiary of Cheil Industries, and the US-based Biogen Inc. Lee has consistently denied the allegations since the investigation started in November 2018.

Samsung heir Lee Jae-yong charged with fraud over 2015 merger

Seoul, June 8 (IANS) Lee Jae-yong, the de facto leader of Samsung Group, South Korea's largest conglomerate, appeared in court on Monday for a hearing to decide whether he will be arrested again amid allegations of his involvement in a merger and accounting fraud. Lee, also the vice chairman of Samsung Electronics, showed up at the Seoul Central District Court in southern Seoul, reports Yonhap News Agency. The hearing is likely to last at least several hours, as many expect the court's decision to come out late Monday night or early Tuesday morning. He is under probe in connection with the controversial merger of two Samsung affiliates in 2015, an apparent key process in his takeover of control of the group from his ailing father, Lee Kun-hee. Last week, the Seoul Central District Prosecutors Office sought an arrest warrant for the Samsung scion, arguing he should be put back in jail, given the seriousness of his alleged wrongdoings and the possibility of destroying relevant evidence. It is a prelude to a widely expected indictment against Lee. Prosecutors also requested arrest warrants for two former Samsung executives, Choi Gee-sung and Kim Jong-joong, who had led the group's now-disbanded control tower, the Future Strategy Office. The three are accused of engaging in unfair trading, stock price manipulation and violation of laws on external audits. Kim faces an additional charge of making a false testimony in court. Investigators suspect the group's top management of having been deeply involved in what they believe was a systemic effort to help the father-to-son transition of Samsung's leadership. They believe that Lee was involved in a scheme to inflate the value of Cheil Industries Inc. and lower that of Samsung C&amp;T prior to the merger in 2015, Yonhap News Agency reported. Lee and his aides were also suspected of inflating the value of Samsung Bioepis, a joint venture between Samsung Biologics and the US-based Biogen Inc., by approximately 4.5 trillion won ($3 billion). Samsung Biologics is a subsidiary of Cheil Industries, of which Lee was the largest shareholder, with a stake of 23.2 per cent. The probe began in November 2018 when the Securities and Futures Commission under the Financial Services Commission filed a complaint against Samsung Biologics over suspicions of accounting fraud. Samsung has said that it has never deliberately manipulated the value of its companies and the prosecution has wrongly viewed the 2015 merger as related to its management succession. If the warrant is approved, it will be the first time in 28 months that Lee will be arrested for criminal charges. He was imprisoned for about a year in 2017 for bribing a confidant of former President Park Geun-hye in return for her administration's support for the 2015 merger. He was released in February 2018 after his sentence was suspended by an appeals court. But the Supreme Court ordered a retrial last year revising the size of the bribes. --IANS ksk/

Samsung heir attends arrest warrant hearing

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Mario Tama/Getty Images</div></div></div><ul class="summary-list"><li>An insurance company is launching what it says is the first embezzlement insurance for wealthy individual investors.</li><li>Many investors facing fraud have trouble recovering their money, said financial adviser Steve Craffen, the chair of the National Association of Personal Financial Advisers.</li><li>One lawyer, who co-wrote an 800-page book on Ponzi schemes, said the insurance 'could be a great thing for investors' but she cautions buyers to read the fine print. </li></ul>Travus Pope understands too well the need to protect against fraud.The insurance executive is still working through a fraud claim against a distributor for his last venture, a film company. He was set to reach a judgement in December, but the distributor filed for bankruptcy just before, leaving Pope without a way to collect what he was owed Alongside two of his close friends, who also were the victims of business fraud, the trio decided to spend two years creating a new product to protect wealthy individual investors in case their financial adviser or asset manager embezzles their money.Their new business, Fort Myers, Florida-based Capital Shield Insurance Services, on Tuesday launched what it says is the first embezzlement insurance for individual investors."You can buy insurance for almost everything else of value in your life, from houses and cars to boats and art," Pope said. "But until now, individual investors have not been able to insure their money in the event that their asset manager or investment advisor embezzles their money."Pope said investors have good reason to be cautious about fraud, particularly after the Bernie Madoff scandal a decade ago. He said Capital Shield's new product would have covered the tens of thousands of investors hit by that fraud. As of July, a government-run insurance program had <a href="https://www.sipc.org/news-and-media/news-releases/20180705">collected over $13 billion for Madoff's victims</a>, about 75% of the $17.5 billion lost by individuals covered by that insurance. See more:<a href="https://www.businessinsider.com/how-bernie-madoffs-ponzi-scheme-worked-2014-7"> 5 Years Ago Bernie Madoff Was Sentenced to 150 Years In Prison - Here's How His Scheme Worked</a>A decade after Madoff, government regulators continue to uncover instances of fraud, particularly against the elderly. In February, the Securities and Exchange Commission <a href="https://www.sec.gov/news/press-release/2019-19">stopped a Florida investment fund scheme</a>, alleging that two men defrauded individual investors out of $3.6 million. In January, a Florida court <a href="https://www.businessinsider.com/a-florida-company-must-pay-1-billion-in-ponzi-scheme-2019-1">ordered an alleged Ponzi scheme operator to pay $1 billion for defrauding 8,400 clients</a>, many of them elderly. Kathy Bazoian Phelps, a Los Angeles-based lawyer with Diamond McCarthy, co-wrote an 800-page book on Ponzi schemes and even considered launching a similar product to protect investors from fraud. "It's ridiculous how much this is a problem, still," she said. However, she's skeptical that Madoff's investors - or even most fraud victims - could benefit from such a product because of the variety of ways they invested in the Ponzi scheme. "It's a good start," Phelps said. "It's a potentially useful product, but I think the definitions and the scope have to be worked out. Anyone considering this needs to understand the coverage."With this new product, investors can buy coverage to cover $1 million to $10 million if an adviser is indicted, with larger limits expected in the future. Right now, the insurance covers investments in publicly-traded markets, but it could be expanded to other areas. <a href="http://newsletter.businessinsider.com/join/4np/wall-st-insider&amp;hash=f4e91136c13f3c40c496d77bc7347502">Sign up here</a> for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.Pope said the product could appeal to any of the 7.5 million millionaires in the US, particularly to investors who lack the time or knowledge to monitor their portfolios for fraud. Clients could include elderly investors, or their heirs; those overseeing and those benefitting from trusts; and divorcees handling their finances alone.Pope and his co-founders have received significant interest in the product from major insurance agencies, he said. He compared the nascent product to cybersecurity insurance, a product that didn't exist decades ago and now commands tens of billions of dollars in premiums.New Jersey-based financial adviser Steve Craffen, who chairs the National Association of Personal Financial Advisers, said that in the cases of fraud he's seen, investors often struggle to recover their money. Often, independent wealth advisers lack the "deep pockets" of a major brokerage to repay clients after they're found guilty.He agreed with Pope that embezzlement insurance could help elderly and trustees in particular."For people that are very cautious and monitor their portfolio and are with a traditional custodian - a Schwab or a TD Ameritrade - fraud is becoming much more difficult," Craffen said.Those groups typically have checks in place to prevent fraud - advisers often can't wire money to accounts other than their clients', for example.Craffen noted that the most infamous examples of fraud, Madoff's Ponzi scheme, hurt investors because Madoff kept investors' capital in-house instead of at a custody bank, where it would have been subject to more oversight. "I bet that true fraud is not that common," he said. "I think what's more common is advisers doing things that are just wrong for the client," like investing in high-fee products, he added. In her legal practice, Phelps said she's seen many examples of fraud and embezzlement that may not end with an indictment, which is when Capital Shield's policy kicks in. "Like any insurance policy, there will be a million ways to find there's not coverage," she said. "I'm leery of how much protection it'll provide, but I hope it does - it could be a great thing for investors." <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/samsung-galaxy-fold-best-features-foldable-phone-2019-2">Samsung unveiled its Galaxy Fold - here are the best features of the $1,980 foldable phone</a></h3> <div> </div> </div>

A new insurance product is trying to protect millionaires from embezzlement and it shows how far-reaching financial fraud is

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Samsung heir Lee Jae-yong charged with fraud over 2015 merger

IANS

Samsung heir attends arrest warrant hearing

IANS

A new insurance product is trying to protect millionaires from embezzlement and it shows how far-reaching financial fraud is

Meghan Morris

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