"Profit Guaranteed Through 'Dollar Hwanchigi'... Two Women Embezzled 120 Billion Won [Economic Crime 24 Hours]"

Pretending to Be from a Wealthy Family, Committed Crimes for 9 Months
Blocked Victims' Reports through Ponzi Scheme

Hwanchigi. A term often heard but unfamiliar.

It is an illegal foreign exchange transaction method where accounts are created in two countries with different currencies, money is deposited into the account in one country, and withdrawn in the currency of the other country from the account created there. For example, creating accounts in Korea and the United States, sending money in Korean won from Korea, and withdrawing dollars in the U.S.

Using hwanchigi allows money to be exchanged without going through a foreign exchange bank, there is no need to disclose the purpose of the remittance, and no foreign exchange fees are paid as would be required in normal currency exchange. When one person deposits money, an intermediary withdraws the equivalent amount in the foreign currency from the counterpart country’s account, takes a certain fee, and hands over the money.

Ms. Park Inja (52, pseudonym) also heard detailed information about this hwanchigi method last March. She received an enticing proposal from Ms. Kim (45, female), whom she knew. Ms. Kim suggested investing by promising a 10-15% profit within two weeks through U.S. dollar hwanchigi. Ms. Kim often flaunted her wealth, saying, “My father works as a university professor in the U.S. and also runs a real estate business.” Swayed by Ms. Kim’s words, Ms. Park invested 50 million won. However, contrary to the initial promise, Ms. Kim did not deposit the profits on time. Whenever Ms. Park asked when she could settle the profits, Ms. Kim would evade the question by citing foreign exchange transaction laws and other excuses. Although anxious, Ms. Park heard that other acquaintances who had invested before her had received their profits, so she trusted Ms. Kim and waited. However, after more than two months without receiving either profits or even the principal, Ms. Park eventually filed a complaint against Ms. Kim with the police.

The Busan Haeundae Police Station, which received the case, immediately launched an investigation into Ms. Kim. Along with Ms. Park, complaints from other victims followed, and during the investigation, the police identified an accomplice, Ms. Yang (53, female).

The police identified 120 victims ranging in age from their 40s to late 60s. Investigations revealed that victims had invested amounts ranging from 20 million won to as much as 1.5 billion won with Ms. Kim. The total damage amounted to a staggering 120 billion won. Ms. Kim and Ms. Yang, who pulled off a major scam in Busan in just nine months, disappeared as soon as the police investigation began.

After obtaining arrest warrants for both, the police tracked communication records and arrested Ms. Kim on August 17 of last year and Ms. Yang on October 4. Contrary to what they had told the victims, it was revealed that they never engaged in hwanchigi but instead continued their crimes using a so-called “Ponzi scheme,” paying profits to some victims with the investment money received from others. The profits they pocketed amounted to 50 billion won out of the total 120 billion won.

Ms. Kim and Ms. Yang, who were arrested and detained together, were sentenced to 18 years and 20 years in prison respectively in the first trial, and their appeals are currently underway.