"10% Monthly Returns for 5 Years"... Police Launch Investigation into Ponzi Scheme

Exterior view of Gwangju Bukbu Police Station.

The police have launched an investigation into a Ponzi scheme (multi-level fraud) group that attracted investors by promising high returns and paid out profits using funds from new investors.

On July 1, Gwangju Bukbu Police Station announced that they had received a complaint and begun investigating the CEO, identified as A, and an employee, identified as B, of "U Company," based in Changwon, Gyeongnam, on suspicion of engaging in illegal fundraising activities.

A and B are accused of running a multi-level financial fraud scheme by receiving approximately 60 million won from victim C as an investment and then recruiting additional victims.

B, who introduced himself as a "two-star" rank (a supervisor managing around 200 investors), is reported to have recruited investors in the Gwangju and Jeonnam regions by promising, "For five years, we will pay 10% of the investment amount every month."

As a result, C deposited approximately 60 million won into the platform operated by "U Company" in February. However, the returns were limited to four split payments per month, totaling 9.8 million won.

After the investment was deposited, B told C, "You must recruit five new investors in order to receive your returns."

The complaint states, "Recently, B wrote in a group chat with investors, 'CEO A has been detained in connection with stocks and hospitals, so the platform has been temporarily suspended. If there is even one complaint or lawsuit, the chairman cannot be released on bail, and it will be difficult to normalize the company.' The failure to pay the promised returns is an act of deceiving the victims."

It is reported that U Company used this method to attract tens of thousands of investors nationwide.

A police official stated, "As this is an ongoing investigation, we cannot disclose specific details at this time."