24.5 Billion Won Fraud Scandal: 118 Arrested

A Complex Fraud Scheme Uncovered

A sophisticated fraud ring has been dismantled by the Busan Metropolitan Police Agency, after deceiving 284 victims into investing a total of 24.5 billion Korean won. The group falsely claimed that unlisted stocks were about to go public, luring individuals with promises of high returns. The suspects allegedly used shell companies and foreign cash withdrawal teams to launder their ill-gotten gains.

The police arrested 118 individuals, including members of an investment chatroom fraud ring, for violating the Capital Markets Act and operating a criminal organization. Among them, 28 suspects, including Mr. A, a man in his 20s who managed a call center, were detained.

From October 2023 to April this year, Mr. A and others posed as investment experts, using pre-made fake investment sites to trick victims into believing they were making profits. This led to the embezzlement of approximately 24.5 billion won from 284 victims.

How the Scam Worked

The group gained trust by sharing information about unlisted stocks that were widely expected to go public, claiming they could generate profits. Later, they lured victims by offering exclusive knowledge of these stocks, collecting large investments before disappearing.

Victims suffered an average loss of 86 million won, with one individual losing as much as 1.87 billion won. The organization operated in a cell-like structure: recruiters lured victims to SNS open chat rooms, call centers deceived victims via phone or SNS, and a laundering team converted illicit funds into cash, checks, or Tether coins before transferring them to higher-ups.

Managers also confined members to training facilities and drilled them on situational manuals to evade investigations.

Operational Tactics

A police official stated, “Most investment chatroom fraud rings operate overseas, but this group unusually operated domestically, likely for easier recruitment and management. To avoid detection, they set up call center offices in sparsely populated reconstruction villa complexes and frequently changed crime locations.”

The group was found to have established shell companies and issued checks from corporate accounts to launder criminal proceeds. They also operated a cash collection team composed of Vietnamese nationals.

Financial Impact and Recovery

The illicit funds were used to purchase luxury foreign cars, designer brands, jewelry, and other luxury items, maintaining extravagant lifestyles. Police seized 104.9 million won worth of cash, luxury goods, and 107 disposable phones from the group’s offices. Additionally, they applied for pre-indictment asset preservation on real estate worth 676 million won, which was approved by the court.

Further analysis of over 10,000 disposable bank accounts used in the crimes revealed additional deposits exceeding the initially identified damages, as well as unreported cases where victims believed their investments were legitimate.

Ongoing Investigations

Police are currently tracking the remaining suspects, including the mastermind. A police official urged, “Cases exploiting investment psychology are frequent, requiring heightened caution. Victims must report incidents actively.”