Insurance planners accused of taking part in PS Financial's Ponzi scheme (multi-level financial fraud) were referred to prosecutors in large numbers. Police said they have wrapped up their investigation into key figures, including a person surnamed Lee, the head of the lend company, who led the Ponzi scheme, and will decide whether to make additional referrals.
According to police on the 7th, the Gangnam Police Station in Seoul on the 31st referred 58 people without detention to prosecutors on charges of engaging in an illegal deposit-taking scheme, including insurance planners who had belonged to PS Fine Service, a subsidiary of PS Financial, and Mirae Asset Financial Services, a subsidiary of Mirae Asset Life Insurance, and referred 12 people on charges of illegal deposit-taking and fraud. More than 100 suspects were investigated, but the rest were not referred due to insufficient evidence.
They are accused of selling a non-existent PS Financial financial product during insurance sales and raising hundreds of billions of won in illegal deposit-taking funds. They introduced the product as an ultra-short-term bond that pays 3% per month (42.6% per year) in interest and guarantees principal. Some held money management and financial planning lectures via social media (SNS) and recommended investments to people who participated. Once the investigation of the head, a person surnamed Lee, who led the Ponzi scheme, is completed, the final damage is expected to exceed 1 trillion won.
The referred insurance planners signed agency contracts with PS Financial and reportedly took around 3% of the amount raised as a commission each time they attracted illegal deposit-taking funds. Midlevel managers such as branch managers received 0.2% to 1% of the amount raised.
The PS Financial financial product they sold was found not to exist. A company registered for lend business cannot sell bonds or similar instruments. The contract was also a simple monetary loan agreement in which the investor lends money to PS Financial and receives back the principal and interest.
The main culprit, a person surnamed Lee, the head, is accused of using the illegal deposit-taking funds gathered by insurance planners to pay interest to investors, and when a cash crunch began in the second half of last year, using new investment money to pay interest to existing investors in a rollover scheme. Whether to refer the case has not yet been decided.
Earlier, the Financial Supervisory Service said that 97 insurance planners belonging to PS Fine Service and Mirae Asset Financial Services raised 140.6 billion won from 756 investors through illegal deposit-taking. A police official said, "Because we investigate based on the complaints filed, the results may differ from other inquiries," and noted, "The investigation has not yet been concluded."