Five Including Gift Certificate Merchant Arrested for Embezzling 6 Billion Won in Subsidies Through Illegal Distribution of Onnuri Gift Certificates

Gang Caught Embezzling Subsidies Through Fake Transactions
Daegu Police Seize 2.3 Billion KRW Before Indictment

A group of individuals who fraudulently obtained government subsidies by purchasing Onnuri gift certificates in bulk and exchanging them at financial institutions has been caught by the police.

Daegu Police Agency logo. Photo by Byunggun Kwon

Without providing any services or selling goods, they illegally distributed gift certificates worth approximately 130 billion KRW and embezzled subsidies amounting to 6.2 billion KRW.

The Anti-Corruption and Economic Crime Investigation Unit of the Daegu Metropolitan Police Agency announced on the 15th that they had arrested Mr. A, an Onnuri gift certificate merchant, on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Subsidy Management Act, and booked four accomplices without detention.

The police have seized approximately 2.3 billion KRW of their criminal proceeds before indictment.

According to the police, from January 2023 to November 2024, over a period of about one year and eleven months, the suspects purchased large quantities of gift certificates without actual sales of goods or provision of services, submitted them to financial institutions for exchange, and collected government subsidies equivalent to 5% of the face value.

In particular, Mr. A, who was arrested, opened two additional fake merchant accounts under other people's names and used false invoices to expand the monthly exchange limit of three merchants to 9.9 billion KRW, thereby increasing the scale of illegal exchanges and personally embezzling approximately 5.7 billion KRW.

The Onnuri gift certificate is issued under the "Special Act on the Promotion of Traditional Markets and Shopping Districts" and can be used like cash at traditional markets and shopping districts nationwide, with the government providing support in the form of indirect subsidies.

Buyers can purchase the certificates at a price 5% lower than the face value, and merchants can submit the certificates received from customers to financial institutions to exchange them for the full face value.

An official from the Daegu Metropolitan Police Agency stated, "In addition to these suspects, nine more individuals have been booked so far, and we plan to continue expanding the investigation into similar crimes," adding, "We will respond strictly to illegal distribution crimes that undermine the revitalization of traditional markets."