"Guaranteed High Returns"... Gang Il-dang Swindled 1.5 Billion Won by Selling Nonexistent Stocks

Fake Stock Trading Site Established
Disguised as if Legitimate Transactions Occurred

A group that promoted investment in unlisted stocks as a way to earn high returns and embezzled about 1.5 billion won has been handed over to the prosecution.

Video capture screen at the time of arrest. Provided by Seoul Metropolitan Police Agency

On the 20th, the Seoul Metropolitan Police Agency's Criminal Mobile Unit announced that they had arrested and sent to prosecution A (28), the ringleader of a fraud organization operating domestically, on charges including violation of the Act on the Protection of Victims of Electronic Financial Fraud, and sent eight other members, including managers, to prosecution without detention.

They are accused of soliciting investment in unlisted stocks to an unspecified number of people from May to the end of October this year by claiming "you can earn high returns," and deceiving 86 victims by pretending to sell stocks they did not actually own, embezzling a total of 1.5 billion won.

According to the police, they used unlisted stocks that had attracted public attention among those whose public offering schedules were announced through the Financial Supervisory Service's electronic disclosure system (DART) or media reports as materials for their crimes. The group pretended to own these stocks and encouraged an unspecified number of people to buy them. After purchases were made, they created fake stock trading websites to make it appear as if normal transactions were taking place.

They impersonated investment advisory firms by saying, "We hold a large amount of shares owned by major shareholders. As part of company promotion, we will give unlisted stocks confirmed for listing for free," or impersonated securities firms by saying, "We checked the shareholder registry. We will buy the unlisted stocks you hold at a high price," deceiving investors into believing they could earn high returns if they sold their stocks immediately. The largest confirmed damage amounted to 81.8 million won.

Messenger conversation content between the perpetrator and the victim. Provided by Seoul Metropolitan Police Agency.

Contact information and other personal data for the crimes were obtained through various channels such as lottery number prediction sites, Facebook, and Instagram. Initially, they used paid member databases (DB) from already closed lottery number prediction sites to carry out the crimes, but as the success rate of this method declined, from August they posted video advertisements on social networking services (SNS) like Facebook claiming "You can earn high returns with a small amount of money," and collected personal information of people who clicked the buttons below these ads.

The police launched a full-scale investigation in August and, about two months later at the end of October, identified an officetel in Bucheon, Gyeonggi Province as the crime scene and conducted a crackdown. The police plan to recover the criminal proceeds obtained by A and his group through pre-indictment seizure and confiscation procedures.

A police official said, "Recently, as interest in initial public offerings (IPOs) of famous companies has increased, crimes involving the sale of fake stocks promising high returns in a short period have become rampant," adding, "They use materials that attract attention such as virtual assets or unlisted stocks, and lure victims with advertising videos certifying high returns and unlisted stock trading sites. Please keep in mind that such videos and trading sites are false."