K-pop agency head spent money in concert deal on real estate and then lied to cover it, prosecutors say

The head of K-pop agency One Hundred Label, whose artists have included EXO-CBX, allegedly spent money she received from a concert promoter on her real estate businesses, then lied to other companies to cover the gap, according to a prosecutors’ indictment reviewed by the JoongAng Ilbo on Tuesday.

Cha Ga-won faces fraud charges involving about 30 billion won ($23 million). She is accused of proposing a business partnership to the entertainment tech company Knowmerce by touting the intellectual property (IP) of her agency’s artists, then collecting 24.2 billion won in advance payments without following through.

The label CEO “began lying to solve a funding crunch by signing duplicate and split contracts with other companies after using and squandering ‘advance payments’ received from a concert promoter on funds for a real estate corporation and other purposes,” the prosecutors wrote in the indictment. "She used and squandered advance payments received from a concert promoter through concert and merchandise sales contracts since July 2023 for purposes such as repaying debts related to a housing sales project and funding a real estate corporation’s business.”

Before founding One Hundred Label, Cha ran a construction company that developed and sold luxury villas in the Hannam-dong area of Yongsan District, central Seoul.

“This eventually led to problems such as settling earnings for the agency’s artists and a shortage of operating funds for the entertainment agency, and [Cha] began signing duplicate and split contracts with another agency," the indictment said. 

The filing also details specific lies Cha allegedly told Knowmerce to land three deals. They included a merchandise contract for EXO-CBX, a three-member subunit of boy band EXO made up of Chen, Baekhyun and Xiumin, and a concert and merchandise contract for Taemin of boy band SHINee. The third was a deal to launch a channel for girl group fromis_9 on Fromm, Knowmerce’s fan messaging platform, even though the group had never signed with Cha’s agency.

In early November 2024, Cha allegedly told Knowmerce that it would get the contract to produce and distribute EXO-CBX merchandise, assuring the company that an existing deal with another company would end in February 2025.

Investigators found that, “in fact, there was a remaining balance of advance payments that had not been deducted, so it was uncertain whether the contract with Knowmerce could be fulfilled.”

Cha ultimately signed a merchandise contract with Knowmerce that split revenue seven to three and allegedly pocketed a total of 12.1 billion won in advance payments.

She similarly lied in the concert and merchandise contract for Taemin and took 11 billion won in the name of advance payments. "Cha had neither the intention nor the ability to enable the victim company to carry out concert planning or merchandise production and distribution," prosecutors said.

With fromis_9, Cha allegedly told Knowmerce that the girl group would soon join One Hundred Label under a provisional contract that had already been signed, and promised the company the group’s fan messaging platform business in the near future. On that basis, she received 1.1 billion won in advance payments.

But prosecutors found that “a month before the contract, fromis_9’s side had expressed refusal due to disagreements over the number of members to be recruited and the contract terms, so the provisional contract had not been signed.”

Cha was indicted while in custody on Aug. 25 on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. The financial crime investigation unit of the Seoul Metropolitan Police Agency had twice sought an arrest warrant for Cha, but prosecutors opposed, saying, “supplementary investigation is needed.” After further investigation, a court issued a warrant on Aug. 3. Police referred the case to prosecutors on Aug. 7, and the tax crimes investigation department of the Seoul Central District Prosecutors’ Office filed for indictment.

Cha’s side said it “denies all the charges in the indictment,” but said it will give its specific views on the charges at the next hearing on Tuesday. 

Cha reportedly maintains that knowmerce paid the advance payments fully aware of the existing rights involved in each contract and whether the contracts could be carried out, so the payments cannot be seen as the result of deception. She also claims that she offered to return the advance payments, but knowmerce wanted to keep the contracts.

BY KIM JEONG-JAE [[email protected]]