The Supreme Court upheld a lower court’s three-year prison term for the former head of U.S.-based buyout fund Lone Star Funds’ Korean unit on Thursday for manipulating stock prices of the credit card unit at Korea Exchange Bank (KEB) in 2003 in order to buy up the card firm on the cheap.

The Seoul High Court delivered the prison sentence for Yoo Hoe-won, also known as Paul Yoo, in October for announcing a false plan. He said Lone Star would carry out capital reduction on the credit card firm in 2003.

Thanks to the negative market speculation, the firm’s stock prices plummeted, enabling the local unit, LSF-KEB Holdings, to take over the company for a below-market price.

The credit card firm was later delisted and merged with Korea Exchange Bank (KEB), which Long Star’s local unit acquired earlier in 2003.

In the same ruling by the Seoul High Court, LSF-KEB Holdings was fined 25 billion won ($22.3 million) for issuing the false market speculation but did not appeal the decision.

The Supreme Court’s sentence on Thursday also confirmed the lower court’s guilty ruling over Yoo’s tax evasion of 2.1 billion won as well as infliction of 24.3 billion won in losses to a joint firm between the bank and his firm.

KEB, meanwhile, was ruled not guilty in Thursday’s decision for its suspected participation in the stock manipulation scheme, as acquitted by the Seoul High Court in October. 

(Yonhap News)