22 Members Apprehended, Including 4 Key Leaders Detained
An illegal multilevel marketing organization has been apprehended by police for deceiving over 2,000 victims and collecting approximately 40 billion KRW by promising commissions for investments in non-fungible tokens (NFTs) and real estate within the metaverse.
The Anti-Corruption and Economic Crime Investigation Unit of the Gyeongnam Provincial Police Agency announced on June 4 that it had arrested 22 individuals affiliated with the Aha (AT) Group on charges including fraud and violations of the Act on Regulation of Similar Reception of Funds. Four of them, including A, the group’s ringleader and chairman, and B, the president, have been taken into custody.
The Aha Group, known as a health functional food business headquartered in Changwon, Gyeongnam, was found to have operated a so-called Ponzi scheme, using funds from later investors to pay commissions to earlier ones.
According to the police, since 2016, A and others have operated an unregistered multilevel marketing company, repeatedly changing investment items such as blockchain-based virtual characters (NFTs) and virtual real estate to attract new investors.
They falsely promised investors that, depending on the nature of their investment, they would be granted qualifications such as partner or stock purchaser, and receive 5% to 10% of their investment as a commission. They also claimed that those who recruited lower-tier investors would receive a sponsorship commission of 2% to 10%.
It was confirmed that the organization managed its members by promoting them to positions such as team leader, director, or representative based on performance, and paying corresponding commissions.
The group lured victims with claims that investing 10 million KRW could yield even greater profits depending on the business content, ultimately defrauding 2,138 people out of approximately 46.8 billion KRW.
The police launched an investigation after receiving complaints from 53 individuals who were unable to recover their investments. Through account tracing and analysis, the police identified the nationwide scale of the victims and apprehended all those involved in the operation.
Multilevel sales organization revealed as Aha (AT) Group organization chart. Provided by Gyeongnam Police Agency
The investigation revealed that most of the business activities promoted by the group were false, and that they had carried out a typical multilevel financial fraud in the form of a so-called Ponzi scheme.
The group transferred investment funds to accounts under borrowed names for personal embezzlement. When the police investigation intensified, the ringleader used their position to encourage false testimony or to have complaints withdrawn, attempting to destroy evidence.
The police tracked the criminal proceeds and obtained a court order to confiscate up to 26 billion KRW in illicit gains.
Additionally, the disposal of assets worth approximately 15 billion KRW, including real estate, refund claims for down payments, and deposit claims, was prohibited.
The police emphasized, "Investment schemes that promise guaranteed principal and high returns in a short period of time are highly likely to be investment fraud or other crimes," and urged, "Approach with caution and always verify whether a company is properly registered as a similar reception business on the Financial Supervisory Service website."
They added, "We will respond firmly to all financial crimes that exploit the desperate psychology of ordinary people seeking to escape economic hardship and the current investment craze, and work to foster a trustworthy investment environment."
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