[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] A group involved in a large-scale fraud targeting socially vulnerable groups such as North Korean defectors and the elderly has been brought to trial.
They promoted and sold a medical device called a colon cleansing instrument (colon irrigator) as if it had a cure-all effect, deceiving victims by claiming that recruiting subordinate salespeople would automatically generate high profits through referral commissions.
The Criminal Division 4 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Han Gi-sik) announced on the 21st that it has indicted without detention four people, including Chairman A (64) of Group E and his eldest son B (43), on charges of fraud and violation of the Door-to-Door Sales Act for embezzling 657 million KRW from 23 victims, including North Korean defectors, through unregistered multi-level marketing using the colon cleansing instrument as bait.
The prosecution added that it has taken measures to protect the victims, such as requesting victim support from the Victim Support Office for the victims including North Korean defectors.
According to the prosecution, from October 2017 to March 2019, A and others deceived Group E salespeople selling the colon cleansing instrument by falsely claiming, "If the number of salespeople exceeds 10,000, existing members will receive 10 million KRW monthly as rank allowances," thereby embezzling 657 million KRW from 23 victims.
Additionally, the prosecution applied charges for violating the Door-to-Door Sales Act by operating an unregistered multi-level marketing business during the same period, paying rank-based referral commissions structured in multiple stages such as trial rooms, SOHO stores, branches, sales agencies, and comprehensive agencies, and conducting transactions through deceptive methods including false information.
In particular, it was investigated that they mainly gathered elderly people and North Korean defectors at places like churches, made them stay together, and committed these fraudulent acts.
A prosecution official stated, "This case was somewhat prolonged due to repeated transfer requests by the defendants to evade investigation, but by thoroughly comparing and analyzing multiple related case records, the matter was clarified."
He also urged, "Recently, multi-level marketing and fraud crimes are evolving into cases like this one, using products as bait while simultaneously employing self-developed coins whose economic value cannot be guaranteed, so investors need to exercise special caution."
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