"5% Monthly Interest Payment"... Massive Arrests of Fraud Group Involved in 280 Billion Won-Scale Illegal Fundraising and Scam

Insurance Policy Loan and Mortgage Loan Inducement
Embezzlement of 106.7 Billion Won in Investment Funds

A group that deceived investors by promising a 5% monthly interest payment if they invested in their loan business and embezzled about 280 billion won has been handed over to the prosecution. Some of them were found to be relatives of the top recruiters and participated in the crime by transferring accounts under false names.

The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency announced on the 3rd that it had sent 21 people suspected of violating the Act on the Regulation of Conducting Fund-Raising Business Without Permission and other charges to the prosecution. Among them, three top recruiters charged with fraud under the Act on the Aggravated Punishment of Specific Economic Crimes were sent to the prosecution in custody last October.

The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency announced on the 3rd that they have seized bank accounts used in a fraudulent investment scheme and scam involving approximately 200 billion KRW. [Image source=Seoul Metropolitan Police Agency]

They are accused of receiving 287.8 billion won in investment funds from 603 victims from January 2016 to November 2022 and embezzling 106.7 billion won of that amount.

The group posed as businessmen in the Eunpyeong-gu and Mapo-gu areas of Seoul, gathered investors, and promised to increase the investment funds through reinvestment in casinos and horse racing, guaranteeing a monthly interest payment exceeding 5% if invested in the loan companies they owned.

The crime was carried out in a manner where the top recruiter Mr. A (in his 60s) gave instructions to Mr. B (in his 50s) and Mr. C (in his 50s). Mr. B and Mr. C are sisters, and Mr. A was confirmed to have eight prior convictions for fraud. Mr. B approached customers to induce insurance policy loans and also encouraged mortgage loans and credit loans to secure investment funds.

However, police investigations revealed that their investment destinations were nonexistent. The police analyzed transaction details of 184 accounts used in the crime and detected signs of a Ponzi scheme, where profits were paid out using new investors' funds. Relatives of Mr. A also participated in the crime by transferring accounts under false names. Mr. A even instructed them to transport gifts and cash given by victims.

The majority of victims were in their 40s and 50s, with an average loss estimated at about 450 million won. The investor who suffered the greatest loss was found to have lost 3.3 billion won.

The police seized assets worth 7.3 billion won from the three top recruiters, including Mr. A. It was confirmed that Mr. A, Mr. B, and Mr. C were each sentenced to 17 years and 10 years in prison respectively in the first trial and have appealed.

A police official said, "The court's heavy sentence reflects the judgment that the suspects' illegal acts are tantamount to economic murder," adding, "We plan to respond strictly to crimes that harm the livelihood of many victims based on local communities."