On January 28, Ganghwa County in Incheon confirmed that it had concluded a field inspection of Company B, a limited liability company (LLC) whose CEO is Cha Eunwoo’s mother, identified as Ms. A, and in which Cha Eunwoo is listed as an executive. The company’s registered address was the eel restaurant previously operated by Cha Eunwoo’s parents in Ganghwa.
Company B has been suspected of being a paper company with no substantive business operations. As part of the investigation, county officials reportedly visited the registered address to verify the actual use and operational status of the building. It was also revealed that Company B had never registered as an entertainment management agency, despite being linked to Cha Eunwoo’s activities.
Given that potential violations appear to be clearly established, Ganghwa County is now reviewing the legal grounds for possible criminal complaints against the company, following further legal analysis.
Cha Eunwoo and his mother are suspected of establishing multiple LLCs and using these entities allegedly functioning as paper companies to avoid taxes. The amount of additional tax reportedly notified by the National Tax Service alone is said to reach approximately 20 billion KRW (around USD 14 million).
Previously, Cha Eunwoo and his mother converted a one-person agency that had been registered as a corporation into an LLC and relocated its address to the Ganghwa eel restaurant run by Ms. A. One key reason cited for choosing Ganghwa as the registered location is that the area is classified as a growth management zone under Korea’s Capital Region Planning Act, allowing companies to avoid heavy acquisition and registration taxes which can otherwise be levied at up to three times the standard rate.
In fact, Company B later added “real estate leasing and sales” to its list of business purposes, further fueling suspicions that the structure was designed to exploit tax benefits rather than conduct genuine operations.
The eel restaurant has relocated and expanded to Gangnam, Seoul. In addition, Ms. A reportedly established another LLC, Company C, in Gangnam last December. This new entity also appears not to have completed the required registration as an entertainment management business.
The decision to switch from a corporation to an LLC has raised further questions, with some suggesting the move was intended to avoid external audits and make tax avoidance easier.
Cha Eunwoo has appointed the major law firm Shin & Kim (Sejong) as his legal representative and has formally begun procedures to contest the National Tax Service’s tax assessment.
His agency, Fantagio, stated on January 27, “Once legal and administrative judgments are clearly determined, we will responsibly take the necessary actions in accordance with the results.”
Sources: Nate
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