Not just Lee Seung Gi, Lee Sun Hee is also a victim? Hook is suspected of embezzling concert goods sales

Many are suspecting that Hook Entertainment did not report to the tax authorities the cash they gained from selling fan goods.

On September 2nd, 2016, at the Sejong Grand Theater in Seoul, singer Lee Sun Hee (58) successfully wrapped up the first day of her national tour. Outside the concert hall at that time, employees of Hook Entertainment were busy selling CDs and frames signed by Lee Sun Hee as official concert goods. The price of a CD was KRW 25,000, and the frame was KRW 40,000 per piece. However, Hook staff only accepted cash and denied all card payments, saying that “We ask for your understanding as these goods are limited for this event only.”

Many are raising suspicion that Hook Entertainment did not report the cash they received to the tax authorities but delivered it to the CEO. Hook generally admitted to the allegations, but explained, “We have never required cash payments only, and the cash that we received was only used by the CEO as incentives for concert staff, never for her personal use.”

According to the company’s goods sales book obtained by Chosun Dotcom, sales of goods sold at Lee Sun Hee’s 46th concert were 110 million won. Among them, cash payments were KRW 96.1 million, far exceeding 80%. Card payments weren’t even accepted at some specific time. They sold KRW 3.3 million worth of goods at the Jeonju concert held from October 7th-8th, 2016, and KRW 5.1 million at the Daejeon concert from November 5-6 of the same year, all of which were cash payments. One insider of the industry responded that this excessive proportion of cash payments is questionable.

According to a report from Chosun Dotcom, Hook did not properly report its cash payment sales. According to Hook’s VAT report of the concert, Hook only reported VAT on KRW 13.9 million won in card payments and about 8 million won in cash receipts. The remaining goods’ cash sales of 88.1 million won were omitted.

Where did the cash sales that weren’t reported to the tax authorities go? After the concert, the employees delivered the collected cash to Director A in a paper bag, who eventually handed it to CEO Kwon Jin Young.

In addition, a former employee who said that Hook sold goods at the concert site claimed that there was an order to induce cash payments. When the concert was in full swing in 2018, CEO Kwon gathered the agency’s employees and told them, “We need a lot of cash, so think about how to sell goods.”

Hook admitted that they did not report VAT on the cash sales of goods sold during the concert. When asked if there was any record of depositing goods sales into the corporate account, they also said “No”. However, they claimed that all the earned cash was spent for “business purposes” and that they did not intentionally induce cash payments.

Director A said, “It’s true that we received goods sales from the employees and passed on to CEO Kwon. Goods sales were not a large amount, just tens of millions of won, so we didn’t recognize that it was important to manage it with the corporate account or report tax. We’re sorry about this. We’ll improve.”

A tax accountant shared, “If the agency took the lead in selling goods, all sales should be recorded in the corporate account. However, if the company’s profits were leaked externally without depositing them into the corporate account, this could be embezzlement under the criminal law.”

Regarding the fact that cash payments are excessive compared to card payments, the tax accountant explained, “After the concert, fans flock to buy goods. The waiting is longer because there’s only one card terminal. The unit price isn’t high, so it seems that it was calculated quickly in cash. I’ve never heard of inducing cash payments or something like that, and it never happened.”

Director A emphasized that CEO Kwon never misappropriated goods sales for personal use. Director A said, “The cash sales of goods in one concert are around 2 million won. Usually, Lee Sun Hee’s concerts are accompanied by dozens of staff members, including 11 band members, lighting team, stage team and dancer team. We used it as get-togethers’ expenses or gifts of money.” When asked if they paid the staff every time, director A replied, “No.”

Meanwhile, Hook Entertainment is embroiled in a controversy after Lee Seung Gi revealed that he wasn’t paid a penny for 137 songs during his 18 years of career. Lee Seung Gi sent a content certificate demanding Hook provide him with details of his digital sales profits and pay him his music-related profits. He then notified Hook of the termination of his exclusive contract on Dec 1st, 2022.

In addition, Hook is suspected of misappropriating corporate card. CEO Kwon used Hook’s corporate card for her shopping and travel for 6 years from January 2016 to July last year. During this period, CEO Kwon reportedly spent about 2.8 billion won. She also reportedly gave Hook’s corporate card to her acquaintances and mother.

Hook was also seized and searched by the police in November last year. The specific reason for the search and seizure was not revealed. According to the legal circle, some executives, including CEO Kwon, were suspected of embezzlement.

Source: Chosun Ilbo