A group of loan sharks who charged an exorbitant interest rate of 38,000% to small-scale self-employed individuals and low-credit citizens in need of business funds has been apprehended.
The Gyeonggi Province Special Judicial Police Unit announced on the 16th that through a planned investigation into illegal lending from January 2 to April 28 this year, they arrested a group of loan sharks who lent 9.9 billion KRW to 577 people and charged a deadly high interest rate of up to 38,274% per annum. Seven suspects have been sent to the prosecution, and the remaining three will be sent once the investigation is completed. The annual interest rate of 38,274% charged by the apprehended loan sharks is the highest illegal interest rate among cases caught by special judicial police units nationwide.
According to the investigation, Mr. A and two suspects he met via Telegram conspired to post advertisements for "corporate emergency loans" on the internet and illegally lent and brokered loans amounting to 8.064 billion KRW to a total of 416 small business owners, collecting 1.02374 billion KRW in interest (with an annual interest rate of up to 38,274%). It was also confirmed that they physically assaulted some victims.
Mr. B, a loan shark operating a pawnshop, lent a total of 77.98 million KRW to 37 victims using valuables (pure gold necklaces, computers, etc.) as collateral and received 84.51 million KRW in repayments. The interest Mr. B received was approximately 6,952% per annum.
Meanwhile, Mr. C required advance payments under the pretexts of fees and notarization costs when disbursing loans, scouted locations without CCTV in advance, and immediately collected cash on-site to disguise the loans as legally compliant by not exceeding the statutory interest rate of 20% per annum. Using this method, Mr. C lent 1.22765 billion KRW to 86 people and collected 1.76 billion KRW.
The provincial special judicial police unit also uncovered a case where a minor illegally lent money to 37 people online and collected high interest rates under the names of service fees and late fees.
Using a "mystery shopping" investigation technique, the provincial special judicial police unit arrested four suspects for distributing illegal loan advertising leaflets and seized 28,000 illegal flyers. Notably, two of these suspects had previously been caught and punished by the provincial special judicial police in 2021 and 2022 for violating the Loan Business Act.
Kim Kwang-deok, head of the Gyeonggi Province Special Judicial Police Unit, explained, "We received a tip-off from local merchants that small business owners on the brink of collapse were being extorted with deadly high interest rates. Based on extensive data obtained through inquiries and execution of search warrants, we uncovered the criminal activities after months of on-the-ground investigation."
Meanwhile, Gyeonggi Province is conducting promotional campaigns, counseling, and customized education by visiting traditional markets, industrial complexes, and various schools to prevent illegal private loan damage.
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