The former Seoul branch chief of Lone Star, who had led the US equity fund's acquisition of a local bank, has been arrested in the United States, South Korea's justice ministry said Sunday.

Steven Lee, a Korean American who headed the branch office between 1998 and 2005, was caught in New Jersey, 17 years after the South Korean government had asked the US authorities to extradite him in 2006, according to the Ministry of Justice.

Texas-based Lone Star took over the Korea Exchange Bank at a below-market price in 2003 and sold it to Seoul-based Hana Financial Group in 2012, earning a hefty profit from the transaction.

Lee was suspected of playing a key role in dealing with the purchase of KEB through manipulating financial records and collaborating with Korean government officials and financial heavyweights.

Lee himself also faces charges of embezzlement and tax evasion.

Prosecutors launched a probe into Lee in 2006, but he had already fled to the US a year prior. Then, the South Korean government sought the extradition of Lee.

The Ministry of Justice said it will cooperate with the US authorities in repatriating him.