On the 8th, it was confirmed that investors of the well-known domestic gallery, Seojeong Art Center, which is facing allegations of an Art Tech Ponzi scheme, have applied for corporate rehabilitation proceedings (court receivership) for the center. This is a measure to freeze assets and liabilities to prevent the outflow of investments.
Seojeong Art Center is known as a gallery that invests in works by domestic and international artists with funds from individual investors and distributes revenue. It has been sued for Ponzi scheme violations of the Fraud and Similar Receipts Act since it stopped paying revenue to investors from May. The industry estimates that the financial damages from Seojeong Art Center's Art Tech scheme may reach several hundred billion won.
The Seoul Rehabilitation Court has initiated corporate rehabilitation proceedings for Seojeong Art Center, which was applied for by creditor Kim, a person surnamed Kim, and one other individual, and imposed measures to freeze the center's debts and assets the previous day. The applicants are known to be investors in Art Tech products sold by Seojeong Art Center. Recently, investors of Seojeong Art Center shared their experiences of being victimized through open chat rooms and prepared for legal responses. Currently, it is reported that there are more than 300 investors.
Seojeong Art Center gathered investors by promising to pay them a monthly revenue of 0.8% for purchasing artworks from affiliated artists and displaying them through exhibitions, etc. Recently, it attracted investment by promising a monthly revenue of 1% for fractional investments in works by famous foreign artists like Andy Warhol.
The center has suspended revenue payments since May. Subsequently, it announced to investors that the distribution of revenue was delayed due to a National Tax Service audit, stating that it would resume payments soon. However, revenue payments have not been resumed, and the representative, A, has been avoiding contact with investors. Consequently, victims have sued the center, and the police conducted a search and seizure at the Seojeong Art Center headquarters in Gangnam, Seoul, and A's mobile phone on the 30th of last month.
Since the center has been selling Art Tech investment products since 2015, the scale of victimization is expected to be considerable. It is reported that due to the high-yield Art Tech products, investments from individuals have ranged from tens of millions won to as much as hundreds of millions won. The industry believes that the financial damage, compared to other Art Tech Ponzi scheme cases, may amount to hundreds of millions won to possibly reach several billion won.
Investors have reportedly identified circumstances indicating that the center did not purchase artworks from exclusive artists as initially promised. It is said that the investment contracts, which stated that revenue from purchasing artworks would be returned to investors through exhibitions or advertisements, were never executed.
This publication attempted to contact the headquarters in Gangnam to hear the position of Seojeong Art Center but received no answer.