The Seoul Central Prosecutors’ Office is investigating allegations that Gloworks chief executive Park Sung-hoon may have compromised the health of his firm with inappropriate corporate activities, police sources said on Monday.

Park is best known as the chief executive of online music provider Bugsmusic, which was transformed into a company developing natural resources called Gloworks.

Some of the charges suspected of Park may include inflating stock prices and appropriating company finances, those close to the matter said.

However, Gloworks and Park claim that company stocks were not artificially boosted, and that the firm has submitted the necessary documents supporting its claims.

Gloworks also pointed out that Park had been in the past acquitted on charges of appropriating loans taken out by his firm. Park, at the time, had been using the loans in efforts to keep the company afloat, Gloworks said.

In the meantime, trade of Gloworks stock has been suspended. Park was previously head of Bugsmusic, which he launched in 2000.

The website became hugely popular and was said to have rewrote the history of venture firms at a time when venture start-ups were just starting to regain their lost glory.

Park stepped down as CEO in September of 2007.

The company was later sold to Neowiz, and changed its name to Gloworks. Park soon gained shares in the firm to once again head the company in 2009.

Afterwards, Park changed stripes to become a resources developer and embarked on business projects in Mongolia and Kazakhstan. 

By Kim Ji-hyun (jemmie@heraldcorp.com)