Yang, 49, was being investigated over suspicions that he arranged and paid for sexual services for two investors from Southeast Asia in 2014 at an adult entertainment establishment in southern Seoul.
The police said they have secured evidence that could back the allegations and booked three employees of the adult entertainment establishment.
Yang has flatly denied the allegations.
The police are set to call Yang in for questioning as a suspect in the coming days.
Yang came under scrutiny in the wake of the Burning Sun scandal involving former Big Bang star Seungri, who also faces allegations of having procured prostitutes for investors, as well as allegations of having embezzled company funds.
By Ock Hyun-ju (firstname.lastname@example.org)