Prosecutors Arrest and Indict Shopping Mall CEO on Charges of 440 Billion Won Diaper and Gold Bar Group Purchase Fraud

Seoul Central District Prosecutors' Office. / Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Daehyun] The CEO of a group-buying shopping mall accused of defrauding approximately 440 billion KRW by falsely claiming to sell diapers and gold bars cheaply through group purchases has been indicted while in custody.

On the 12th, the Criminal Division 4 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Han Gisik) announced that on the 9th, they had arrested and indicted A (34), the CEO of an online shopping mall, on charges of fraud and violation of the Act on the Regulation of Conducting Fund-Raising Business Without Permission.

Previously, A is accused of operating 10 group-buying sites from December 2018 to last January, falsely claiming to sell diapers and gold bars at prices lower than market value, and collecting about 446.5 billion KRW from approximately 20,000 victims.

He is also charged with defrauding about 1,675 billion KRW from approximately 8,000 people by promising that if they paid in advance for goods priced 10-50% below market value from last September to January, he would return the equivalent market price amount after 3 to 6 months. According to the prosecution, A committed these fraudulent acts using a so-called 'Ponzi scheme' method since 2017.

A prosecution official stated, "Although the discount rate posted by the defendant was up to 50%, making normal transactions impossible, many victims suffered huge losses due to the shocking discounts and the psychological reassurance provided by group purchases."

He added, "While many legitimate 'group purchase recruitment' and 'group buying' transactions occur between individuals on various social networking services (SNS), there are also cases like this one where crimes are committed. Therefore, consumers need to exercise special caution by carefully checking conditions such as delivery, returns, and refund guarantees when using such services."