OSAKA — The Osaka District Court on Thursday sentenced former fugitive real estate executive Heo Young Joong to 71/2 years in prison and fined him 500 million yen for aggravated breach of trust and tax evasion.
Heo, a South Korean national known for his ties with the underworld and influential politicians, was sentenced in connection with the multibillion-yen scandal that helped bring down Osaka trading house Itoman Corp — one of the nation’s largest postwar business fraud cases.
Lawyers representing Heo said they will consider appealing.
The court found Heo, 54, guilty of all charges brought against him, including two counts of aggravated breach of trust and evading 3 billion yen in corporate taxes.
The court ruled that Heo had caused some 36 billion yen in losses to the defunct Itoman Corp. through a conspiracy with Yoshihiko Kawamura, 76, a former president of Itoman, and Suemitsu Ito, 56, a former managing director.
In September 1999, Kawamura was sentenced to seven years and Ito to 10 years for aggravated breach of trust and other charges in connection with the scandal. Both men are appealing to a higher court.
Presiding Judge Makoto Himuro said Thursday that Heo, in collaboration with Ito and another former Itoman executive, caused 26 billion yen in losses to Itoman by making Itoman spend 53.5 billion yen to purchase 211 paintings and other works of art at inflated prices through Heo’s company in 1990.
Although Heo had pleaded not guilty, claiming that the paintings were handed to the trading firm as collateral for loans and that they had sufficient value as such, the court rejected the argument.
Therefore, Heo must have known the deal would have caused losses to Itoman while he still profited, it said.
On another count of aggravated breach of trust, Heo, together with Kawamura and Ito, conspired to have Itoman extend 20 billion yen in loans to Satsuma Kanko Co., a development firm owned by Heo, the court said.
The money was designated for the development of a golf course, but instead was spent on buying 8.3 million yen in shares, which were actually worth 5.4 billion yen, in a Takamatsu-based agricultural machinery maker.
Although 5 billion yen was paid back to Itoman, the loans caused Itoman to suffer 9.6 billion yen in losses, it said.
The court said that in extending a 20 billion yen loan to Heo that was apparently difficult to collect considering Satsuma’s financial status, Kawamura and Ito were working against Itoman, and Heo must have known that. Consequently, Heo was also liable for aggravated breach of trust, it said.
On the tax evasion charge, the court said Heo deceived authorities by claiming his company was in the red in fiscal 1989, although it actually had profits of 7.6 billion yen and had to pay 3 billion yen in corporate taxes.
After he was released on bail in December 1993, Heo was given permission to visit South Korea in September 1997 to attend a memorial service for a relative of his wife, but later disappeared. He was located and detained by police in Tokyo in November 1999. The trial resumed last month after a 28-month recess.
The financial damage from the scandal led to Itoman’s collapse and subsequent absorption by Osaka-based Sumikin Bussan Kaisha Ltd., a subsidiary of Sumitomo Metal Industries Ltd., in 1993, bringing the trading house’s 110-year history to an end.
In a separate case before the Tokyo District Court, Heo is also being tried for allegedly swindling 18 billion yen from an oil material sales firm.
His name has also surfaced in a recent bribery case involving former Construction Minister Eiichi Nakao.
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