Merchants at Garak Market in Songpa District, Seoul, filed a police complaint against a club manager who disappeared with more than 1 billion won in pooled savings.
According to police and others on the 31st, 41 Garak Market merchants filed a complaint with the Songpa Police Station that day accusing the club manager, a person surnamed Kang, of taking off with the pooled savings (fraud). Some merchants had already reported the damage to police, but they submitted additional complaints to clarify the period and amount of the losses.
The total amount of damage claimed by those who filed the complaints that day is a little over 1.5 billion won. They said they have not been able to get back pooled savings ranging from 6 million won to 120 million won per person. Including merchants who filed separate complaints against Kang, the number of victims exceeds 60 and the scale of the losses is said to be even larger.
According to the complainants, Kang took over the club around 2010 from in-laws who had been running it. Among the victims are people who have participated in the club for more than 30 years since the in-laws' time. But trouble began when Kang failed to pay out the pooled savings for new clubs formed between September last year and Nov. this year.
The club was run as a "bidding club." An auction was held, and the person who offered the highest interest received the pooled savings first. The rest of the members split this interest equally. Put simply, those who needed cash urgently would bid a higher interest to get their money quickly, while those with relatively more flexibility would receive interest and take the pooled savings later in turn.
The club manager received the pooled savings first and had no interest burden. Instead, if a member failed to pay interest, the club manager bore that responsibility. The victimized merchants said that because Kang had run the club for a long time, they never thought the manager would disappear with the pooled savings.
Participants expected an average annual interest rate of around 7%. There is a timing gap between paying for inventory purchases and receiving sales proceeds, and many joined the club because there were no suitable short-term loan products. Some joined to roll funds for children's wedding or tuition money at a time when bank deposits interest was low.
The victimized merchants say they feel betrayed. A month before the manager disappeared, in Oct., the manager's child held a wedding, and most members either attended or sent congratulatory money, showing how close they were.
Many were also angered by the text message sent on the 26th by the law firm retained by the club manager, Kang.
The message said, "To prevent confusion over the facts and unnecessary misunderstandings, we are handling the matter collectively through the law firm," and added, "We politely request that, rather than contacting the club manager directly, you consolidate communications to the law firm's email."
It continued, "The law firm is coordinating with Mr./Ms. Kang, the club manager, and is organizing the current flow of funds and the future course of action," and, "We will provide guidance to members sequentially as soon as the arrangements are finalized."
Attorney Kang Young-min of Suryun Asia, the law firm representing the victims, said, "From the victims' perspective, it makes them think the text was sent to avoid arrest and other compulsory investigations despite having no intention or ability to repay the losses," and added, "We hope the truth will be quickly uncovered through the investigation, and that if a crime is established, appropriate punishment will be imposed and compensation will be made."
Police have finished interviewing the complainants and are analyzing the flow of funds. Compulsory measures against Kang have not been decided. A police official said, "We are conducting the investigation according to procedure."