The Seoul Eastern District Prosecutor’s Office has indicted former LOEN Entertainment CEO “Shin” (56), former LOEN Entertainment vice-president “Lee” (54), and former Director of Headquarters “Kim” (48) on charges of violating the special criminal laws on economic crimes and fraud.

Prosecution discovered that between January and December 2009, the three executives are suspected of creating a virtual record label called LS Music, and paid themselves ₩4.1 billion KRW ($3,419,666 USD) by manipulating the usage records of members, making it look like users had downloaded music from their label. Songs were manipulated to show that they were released through LS Music, so the company would receive money for downloads and streams.

They are also suspected of stealing ₩14.1 billion KRW ($11,760,316 USD) between April 2010 and April 2013 by using accounts that have paid for the service, but weren’t actively being used, and taking all of the money for themselves, instead of distributing it to copyright holders of songs.

According to prosecution, the executives did not inform the other parties involved of the changes in contract terms, which is why they are being charged with fraud. Also, in order to hide the fact that they manipulated and cheated, they deleted data to make sure they couldn’t be traced completely.

A representative from Melon has stated that the three executives involved currently have no position in the company today.

Former Director of Headquarters “Kim” was removed from the company in June 2019, and former CEO “Shin” and former vice-president “Lee” have not been involved in operations since Kakao M acquired Melon. The incident took place before Kakao took over Loen, but we plan to compensate the copyright holders as soon as the damages are confirmed. — Melon