Media reports accused Lee, who is in her late 60s, of a litany of abuse of multiple workers renovating her home and of Korean Air employees, including screaming, cursing, slapping and kicking.
Korean Air whistle-blowers have also accused the Cho family of illegally bringing in luxury items from overseas, disguising them as company goods to avoid tariffs and to save transport expenses.
Monday's raid appears to have focused on suspicions the family regularly smuggled luxury items by disguising them as airplane parts and office supplies.
South Korea's family-run conglomerates from Samsung Group to Hyundai Motor Group and Lotte Group have been under intensifying pressure from investors and the government to improve transparency and reduce cross-shareholdings that have kept the groups firmly under family control.
The alleged evasions of customs checks had been carried out by Korean Air staff acting under the family's orders over many years, according to anonymous sources inside the company.
Cho's wife, Lee Myung-hee, is now under a "preliminary" police investigation for alleged physical and verbal violence against workers hired to renovate her Seoul residence in Seoul in 2013.
Korean Air chairman apologises for PR controversies surrounding daughters
Their brother, Cho Won-tae, remains president and chief operating officer of Korean Air.
In his letter of apology on Sunday (April 22), Chairman Cho pledged to strengthen the role of the boardroom and launch a compliance committee to "institutionally prevent" such incidents from happening, while firing his two daughters.
The move did little to assuage public fury, with almost 90,000 people signing an online petition urging the government to ban the firm from using "Korean" in its name.
In 2014 her older sister, Cho Hyun-ah, infamously kicked a cabin crew member off a plane after being served macadamia nuts in a bag rather than a bowl, resulting in the delay of the flight. But she recently returned as president of the airline's hotel network.
Bruce Lee, founder and chairman of Zebra Investment in Seoul, however, urged major stakeholders like the National Pension Service to speak up to keep Chairman Cho and his family in check. "As chairman of Korean Air and as the head of my family, I feel crushed by the immature behavior of my daughters".
He said they would be immediately removed from management.
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