MANHATTAN (CN) – The “de facto” owner of the ferry that sank in April off the coast of South Korea, killing 304 people – mostly children – hid assets to avoid millions of dollars in debt before his death, a creditor claims in Federal Court.
Korea Resolution and Collection Corp. says Byung Eun Yoo concocted an elaborate scheme involving a “complex web of intrafamily, personal and business relationships and shell corporations conceived and designed to encumber” collection on a pair of debts totaling $5.7 million.
Yoo is described in court papers as a “religious leader and businessman in South Korea,” an inventor and photographer who once had a traveling exhibit called Through My Window, which consisted of photographs he took from a single window from 2009 to 2013 from the Evangelical Baptist Church of Korea, which he founded.
The church was branded a cult in 1992 by the General Assembly of Presbyterian Churches, according to a report from the Korea Times.
Yoo also held a patent for a colonic irrigation system, and was dubbed “the millionaire with no face” because of his reclusiveness, the complaint filed Thursday states.
He allegedly went by the art name Ahae, which means child in Korean.
The collection agency says Yoo is considered the “de facto” owner of Chonghaejin Marine, operator of the Sewol ferry that sank off the coast of South Korea on April 16.
“Amidst allegations that his fraudulent schemes indirectly caused the Sewol ferry disaster, B.E. Yoo went into hiding and became South Korea’s most-wanted fugitive after a warrant was issued for his arrest,” according to the complaint.
Yoo – whom the plaintiff names as the owner of about 70 different companies on three different continents – was found dead in a field in July 21. He was said to be hiding in a secret room behind a wall in a villa with almost $2.8 million in 10 different suitcases, according to the complaint.
Korea Resolution has set its collection sights on Semo, a company Yoo allegedly founded in 1979 “that came to operate in several industries, including shipping, shipbuilding, domestic ferry business, electronics, real estate, cosmetics, paint, stuffed toys [and] pewter.”
Semo, for which Yoo was a joint surety, took out a loan with Ssangyong Merchant Bank and Shisegae Merchant Bank in Dec. 18, 1996, and Jan. 30, 1998, respectively, according to the complaint.
“Amidst the Asian Financial Crisis in 1997, Semo filed for bankruptcy with … approximately $219.8 million in debt,” the complaint states.
When the banks filed for bankruptcy as well in 2002, their estates allegedly looked to Yoo for the $5.7 million in principal owed on both loans, plus accrued interest.
Korea Resolution those debts were later transferred to it.
Yoo allegedly restructured the debts in January 2010 on the condition that he disclose all his properties or assets.
The creditor says it discovered that Yoo had failed to declare additional assets of 22 million South Korean won and 10 patents, thus nullifying the restructuring agreement.
Yoo’s debts now owes $16.5 million, according to the complaint. Yoo and his family’s assets are worth $235 million, and Yoo personally owned $126.7 million of that amount, the complaint states, citing Korean news sources.
Yoo hid his assets through a “series of fraudulent transactions and schemes” that included a “number of players and shifty machinations,” according to the lawsuit. Korea Resolution says he used the U.S. operations of his Ahae Press to hide $31.million alone.
Ahae Press, founded in 2011 and run by his son, was ostensibly set up to exhibit and sell photographs Yoo had taken between 2009 and 2013, according to the complaint.
“In actuality… the true purpose of Ahae Press’ operations were to funnel B.E. Yoo’s and his family members’ personal and company assets into Ahae Press’ coffers in a blatant attempt to prevent current and future creditors from recovering their debts,” Korea Resolution says.
Such mechanisms included a scheme of “illusory transactions” in which defendants, their companies and Yoo’s family members gave millions to Ahae Press for Yoo’s photos which plaintiff says “had very little to no market value,” according to the complaint.
A New York Times article on the Sewol ferry disaster found that so much of the ferry company’s money was siphoned off, that it spent only $2 in 2013 on safety training for the Sewol’s crew, according to the complaint. That $2 allegedly bought a paper copy of a safety certificate.
“The lack of safety training was among one of the causes that directly contributed to [the] Sewol disaster,” the 27-page complaint states.
Yoo has long been accused of such schemes, Korea Resolution says, noting that he was arrested in 1992 and convicted of “habitual fraud under the mask of religion” for diverting $1.15 million of his church members’ donations to his businesses. He allegedly did four years in prison.
Korea Resolution wants the court to declare that all assets belonging to defendants be set aside to satisfy his debts.
In addition to Ahae Press Inc., Yoo’s son Hyuk Kee Yoo is named as a defendant. The CEO of Ahae, this man allegedly goes by Keith Yoo and several other aliases, according to the complaint.
Yoo’s daughter-in-law from New York, Elizabeth Yoo, is also named as a defendant, and several aliases for her are also given.
Michael Yim with FordHarrison represents the plaintiff.
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