The Financial Services Commission on Wednesday filed a complaint with the prosecution against Jeon Jong-hwa, a relative of President Lee Myung-bak, for involvement in stock manipulation and embezzlement.

Jeon is the latest person around Lee to be investigated for fraud or other criminal allegations.

According to the FSC, business takeover specialists, Kim and Lee, in 2009 established a private equity fund, Namu Equity, and scouted Jeon, a financial analyst. Jeon is also the son-in-law of Lee Sang-deuk, elder brother of the President.

Namu bought C-motech, a KOSDAQ-listed wireless router-maker, and appointed Jeon as its vice president.

Kim and Lee then embezzled 28 billion won ($24.3 mil.) out of 57.1 billion won scraped through the recapitalization of C-motech. They are also suspected of opening stock accounts under borrowed names to increase the company’s capital.

Though Jeon is not believed to have directly conducted the financial scam, the authorities found him to have falsely documented the notification forms for stock or share acquisition, which suggests that Jeon might have been involved in the incidence. Jeon has reportedly claimed that he is the victim of the swindle.

C-motech was delisted in March. Its president killed himself and minority shareholders petitioned the FSC for investigation.

Jeon is the latest person with connections to Lee to come under investigation for alleged illegalities.

The President’s elder brother is reportedly on the verge of being summoned to the prosecution over his assistant’s multiple bank accounts under borrowed names. The aide, identified by his family name Park, has allegedly received 500 million won in cash from Lee Kuk-chul, SLS Group chairman, who sought his influence in trying to avoid a debt workout program for the group in 2009. Park is also suspected of having accepted bribe from a savings bank in Busan over prosecutors’ investigation into their business improprieties.

Hwang Tae-seop, brother-in-law of First Lady Kim Yoon-ok, is under prosecution investigation for having allegedly received hundreds of millions of won in advisory fees from a defunct savings bank.

On Dec. 14, Kim Jae-hong, cousin of the first lady, was arrested for having received a bribe from the same savings bank in a bid to save it.

By Bae Ji-sook (baejisook@heraldcorp.com)