The head of a local talent agency has been sentenced to a suspended prison term for illegally transferring the profit from the firm to the parent company, also run by him, a local court said Wednesday.

Seoul Western District Court recently sentenced the 57-year-old defendant surnamed Ahn to three years in prison, suspended for four years, on charges of embezzlement.

Investigation found that Ahn, formerly the chief of the now-defunct K-Stars, used the profit from the agency to operate K Stars' mother company, K Media, a video production company. A total of 14.1 billion won ($10.5 million) of the talent agency's profit had been transferred to K Media from March 2016 to November 2020.

Ahn has been accused of not paying hundreds of millions of won in appearance fees for celebrities K-Stars represented, including popular comedians Jang Do-yeon, Yoo Se-yoon and Lee Kyung-kyu. The talent agency declared bankruptcy and ultimately went out of business in September 2021.

Ahn claimed that the two firms were effectively operated as a single company, and that transferring the profit from K-Stars was crucial to saving both firms.

The court, however, said that such transfer was beneficial exclusively to the parent company and should be considered embezzlement. It also pointed out that K Media did not pay interest or provide collateral for the money, meaning that it cannot be considered a loan but a misuse of profit by the parent company.

The court did consider that Ahn did not use the money for his personal gain, and that the K Media had paid back most of the funds it received from the K Stars.