Prosecution Indicts Eight for Arranging Unregistered Loans
Excessive Interest Paid to Real Estate Project Operators
Korea Investment & Securities Involved in Repeated Illegal Lending
The prosecution has sent securities company executives to trial on charges of arranging unregistered loans worth tens of billions of won to real estate project financing (PF) operators.
The Anti-Corruption Investigation Division 3 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Seung-hak) announced on the 24th that it has indicted eight people without detention, including Bang Mo, head of the PF division (currently group head) at Korea Investment & Securities, employee Jo Mo of the PF division, and Kim Mo, operator of an unregistered lending company, on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes.
Bang and Jo are accused of mediating loans from B company, an unregistered lending company operated by Kim, under a so-called '1+1' condition during the initial funding process for real estate PF project operator A company of Korea Investment & Securities from February to July 2021, allowing them to collect interest exceeding 100% per annum.
Real estate PF operators, which proliferated due to the real estate market boom, exploited their lack of funding capabilities by lending initial project funds under conditions requiring enormous interest equal to the principal during the PF loan process.
It was revealed that six people, including Kim, operator of lending company B, lent a total of 2 billion won to A company under a pyramid scheme condition, mediating interest payments of 2.2 billion won, which is 112%, exceeding the legal interest rate limit.
Bang and Jo were investigated to have mediated B company to lend a total of 6.2 billion won to five real estate operators including A company in this manner.
Korea Investment & Securities was also investigated to have repeatedly arranged unregistered lending activities to project operators, receiving high fees from A company separately.
The prosecution stated that since real estate PF funds intended for project implementation were paid as illegal excessive interest, the projects became insolvent, promoting the reckless proliferation of project operators and illegal lenders, and that it plans to strictly respond to related crimes going forward.
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