Prosecutors Indict Deutsch Motors Chairman Kwon Osu and Spouse Without Detention for 'False Tax Invoices and Tax Evasion'

KRW 107.9 Billion in Showroom Construction Contracts Funneled to Borrowed-Name Companies

Fake Tax Invoices Worth KRW 26.6 Billion Issued; Gift and Income Tax Evasion Also Charged

Prosecutors have brought Kwon Osu, chairman of Deutsch Motors, and his spouse to trial on charges of issuing and receiving false tax invoices and evading taxes during the process of funneling Deutsch Motors’ showroom construction projects and other contracts to companies registered under borrowed names held by Kwon’s spouse.

Kwon Osu, former chairman of Deutsch Motors. Photo by Yonhap News Agency

According to the Tax Crime Investigation Department (headed by Yong Taeho) of the Seoul Central District Prosecutors' Office, on the 23rd, Kwon and his spouse, Ms. Ahn, were indicted without detention on charges of issuing false tax invoices in violation of the Act on the Aggravated Punishment of Specific Economic Crimes, among others. The prosecution alleges that the Kwon couple issued and received false tax invoices while channeling showroom and interior projects ordered by Deutsch Motors Group to three companies with borrowed names. Ms. Ahn was also charged with evading gift tax and comprehensive income tax.

The prosecution's investigation found that, over approximately four years from November 2017 to October 2021, they funneled construction projects worth around 107.9 billion won ordered by Deutsch Motors Group to these companies. Although all the actual construction was carried out by a single construction company owned by Ms. Ahn under a borrowed name, the prosecution believes that Kwon and his wife established two additional paper companies to create the appearance of contracts being awarded through a legitimate competitive bidding process. During this process, prosecutors found that some projects were processed as if they were awarded to the paper companies, and Kwon allegedly issued or received false tax invoices worth around 6.2 billion won, while Ms. Ahn was involved in false invoices amounting to approximately 20.4 billion won.

Prosecutors also believe that Ms. Ahn avoided paying approximately 190 million won in gift tax by entrusting shares of the three companies to acquaintances as nominee shareholders in connection with inter-affiliate transactions. Furthermore, it was concluded that she concealed income and evaded about 460 million won in comprehensive income tax by receiving dividends paid to the nominee shareholders back in cash.

A prosecution official stated, "We will do our utmost to maintain the prosecution to ensure that those who undermine the tax order and threaten the nation’s fiscal system receive due punishment commensurate with their crimes."

This content was produced with the assistance of AI translation services.