A group accused of lending 520 million won to about 170 people and charging sky-high rates of up to 12,000% a year has been caught by police.
Seoul Yeongdeungpo Police Station said on Dec. 11 that it arrested 12 people, including the ringleaders A, 28, and B, 28, on charges of violating the Lending Business Act, the Debt Collection Act, and the Interest Limitation Act. Four of them, including sales team leaders, were detained.
They are accused of running an illegal lending business by roping in junior and senior classmates from middle and high schools in Daegu as accomplices from June last year to Oct. this year, and cold-calling people in need of quick cash.
The group lent small sums of 1 million to 5 million won to victims and applied interest rates of 4,000% to 12,000%, exceeding the legal cap of 20% a year. The total amount lent was about 520 million won, and there were 173 victims.
Most of the victims were low-income people in financial hardship, who sent their own photos and contacts of acquaintances to the operators instead of providing collateral. The group was found to have sent false messages to acquaintances, such as saying the victims "work at adult entertainment establishments," when the victims could not repay principal and interest. One victim was found to have received threatening texts even to an elementary school child.
They also created accounts on social media such as Instagram, posted photos of victims holding IOUs or false information, and then sent texts to acquaintances, according to the findings. Some victims, unable to withstand the threats, even attempted extreme choices.
The group hid their identities by alternating between burner phones, aliases, and five to six messenger accounts. For the crimes, they rented large high-rise apartment units as offices and moved every one to three months, and laundered proceeds by managing them through mule accounts and converting them into gift cards and cash.
In Aug., police raided their office and seized 15 mobile phones, seven laptops, five IP spoofers, and 2.39 million won in cash, and arrested five people including a sales team leader and sales staff, referring all of them to prosecutors. On the 2nd, five more suspects were arrested and seven mobile phones, one USB drive, four laptops, and 2.6 million won in cash were seized.
A police official said, "Police will continue investigative activities to root out illegal lending businesses, usury, and debt collection crimes targeting ordinary people."