The PS Financial Ponzi scam (multi-level financial scam) is expected to cause at least 260 billion won in investor losses, and it has been revealed that the company’s representative, Mr. Lee, has privately misappropriated investment funds. He is said to have driven a supercar worth tens of millions of won, including the Rolls-Royce Ghost and Dawn, Ferrari Roma, Porsche Cayenne, Bentley, and Maserati. In particular, Mr. Lee is known as a so-called 'big spender' after sponsoring 2 billion won on the internet broadcasting platform AfreecaTV (now SOOP). Famous internet broadcasters have even filmed birthday celebration videos while holding signs with his nickname.
After Mr. Lee went missing, documents found in his office allegedly included a contract stating that he would acquire new shares of his brother's company for 600 million won in 2019. Several contracts to acquire shares of various small and medium-sized enterprises for tens of millions of won were also discovered. It is reported that Mr. Lee invested 300 million won in equity-linked securities (ELS) and lent tens of millions of won to acquaintances, indicating that he spent tens of millions of won on personal investments.
Inside PS Financial, it is believed that such a level of personal investment and extravagance would be impossible unless Mr. Lee misappropriated investment funds. An employee of PS Financial noted, 'Even if there is a revenue of 360 million won each month, after paying out commissions for salespeople, rent, and salaries, such consumption would be impossible, so I was sure it was a Ponzi scam.'
According to a review by ChosunBiz on the 6th, PS Financial, a lending company established in 2017, has sold various financial products, including QS, PS, and RS. The representative QS product promises an interest rate of 5 to 8% (annual 20%) after 3 to 5 months. PS and RS are each saving-type and lump-sum products, both offering annual interest rates exceeding 20%.
Mr. Lee organized product information and delivered it to employees, who created manuals and promotional materials to distribute to four contracted sales organizations. Salespeople sold products based on this information and received 3% of the raised amount as a commission from PS Financial. These products were introduced under various terms such as bonds, ultra-short-term bonds, funding, and venture investment during the sales process. According to a PS Financial representative, the investment amount for QS, PS, and RS is about 260 billion won. Considering other products, the total loss is expected to be even larger.
However, the products that PS Financial claimed to sell are presumed to not exist. PS Financial operated by making victims believe they were investing in bonds. When victims deposited money, PS Financial lent it to small and medium-sized enterprises and then shared the interest received with the investors. They promised a 20% return but lent to SMEs at a 22% interest rate, profiting from the interest rate difference.
Mr. Baek Seok-jun, a representative attorney at Oen Law Firm, which represents some victims, stated, 'The contract is a monetary consumption loan agreement, not an investment contract.' He explained, 'In reality, it is not an investment but a loan, so there’s no reason for PS Financial to emphasize 'principal guarantee.' He added, 'It seems that PS Financial disguised it as an investment product to attract money, as people wouldn’t be interested if they asked to lend money.'
Some argue that PS Financial might not have initially planned a Ponzi scam. PS Financial started selling QS in 2017, and if they had planned a scheme from the beginning, they would not have been able to survive for over seven years.
It is believed that problems for PS Financial began in the second half of last year. They launched PF products promising 4 to 8% interest for 2 to 4 weeks starting from June last year, attracting investors. In November last year, they even sold an 'Asset Account Jump Product' with promised interest rates of 50% over six months and 100% over one year. When it became impossible to repay the principal and interest to existing investors, they sold products offering higher interest rates.
A PS Financial official said, 'Starting in October last year, Mr. Lee began pressuring sales organizations where the raised amount was less than the principal and interest repayment.' He mentioned, 'At that time, we thought it was simply performance pressure, but in retrospect, it seems there was a lot of rollover.'
Ultimately, Mr. Lee disappeared on December 10 last year after saying, 'There’s a chance that the 10 billion won bond can be recovered, so please wait.' The Gangnam Police Station in Seoul has filed charges against Mr. Lee and roughly ten others under the Act on the Aggravated Punishment of Specific Economic Crimes for fraud and has begun an investigation.