Prosecutors on Wednesday raided the residence of Ku Young-bae, the CEO of Singapore-based Qoo10 Group, as part of their investigation into the massive settlement failures by the group’s subsidiaries, TMON and WeMakePrice. 

The Seoul Central District Prosecutors' Office sent 85 prosecutors and investigators to Ku’s residence in southern Seoul and nine other locations, including the residences and offices of the heads of TMON and WeMakePrice. 

It is reported that in the warrant for the raids, the prosecution said that the three companies are suspected of embezzling 40 billion won, or some 29 million U.S. dollars, and of fraud involving hundreds of billions of won. 

The e-commerce platforms TMON and WeMakePrice are suspected of maintaining contracts with sellers and selling their products even though they were aware that they would not be able to settle payments in time due to a financial crunch. 

The government estimates some 210 billion won in delayed payments, but observers say the figure may reach one trillion won when June and July’s figures are factored in.

Prosecutors are also looking into allegations that the executives of the involved companies used payments that customers made or money that should have been paid to the sellers for other purposes as they sought to expand their businesses excessively.

A prosecution official said such an act could be construed as a type of fraud according to a previous Supreme Court case.