A Seoul appellate court on Tuesday upheld an earlier conviction against the chairman of LIG Group for fraudulently issuing commercial paper worth around 215 billion won ($198 million), handing down a suspended prison term.

Koo Cha-won, 79, had received a three-year sentence from a lower court for orchestrating the fraudulent issuance under the name of the group’s construction arm, LIG Engineering & Construction Co., to get back stakes in the group’s subsidiaries.

The Seoul High Court sentenced Koo to three years in prison with a five-year stay of execution after taking into consideration that Koo had promised to sell his stake in the group to make up for the losses to creditors and investors.

Court records showed that Koo ordered the issuance even though he knew that the firm had lost its ability to pay back its debts and was on the verge of coming under court receivership.

Koo, who has been imprisoned since the Seoul Central District Court’s ruling in October, was released immediately after the verdict.

In the same ruling, the appeals court, overturning a not-guilty verdict by a lower court, sentenced Koo Bon-yeob, the chairman’s second son and the former vice chairman of LIG Engineering & Construction, to three years behind bars for his participation in the fraud.

The younger Koo was imprisoned immediately after the court’s decision.

The court also commuted an 8-year prison term handed down to Koo Bon-sang, the chairman’s eldest son and vice chairman of LIG Nex1, a defense arm of the group, to four years for the same charge.

The Koo family had attempted to get back its stakes in LIG Nex1 and another subsidiary ― which had been provided as security to attract a large investment in the construction firm ― before the company came under court receivership, court records showed.

The construction firm filed for receivership in March 2011 after suffering financial difficulties caused by a recession in the local construction business and growing project financing loans. (Yonhap)