A ring behind illegal private loans accused of pocketing annual interest as high as 24,000% has been sentenced to prison terms.
According to legal sources on the 15th, Judge Park Dong-uk of the Chuncheon District Court's Criminal Division 3 sentenced five people, including A, 43, who were brought to trial on charges of violating the Act on Registration of Credit Business, the Electronic Financial Transactions Act, and the Act on Regulation and Punishment of Criminal Proceeds Concealment, to prison terms ranging from eight months to one year and eight months.
A and others, who did not register as formal credit business operators, entered into lend contracts with victims who contacted them after seeing ads for "non-face-to-face quick loans" on loan brokerage sites, then took their face photos or acquaintances' contact information and pocketed high-interest loan interest, authorities said.
For example, in Nov. 2024, A and others lent 300,000 won for five days and were repaid 600,000 won under the pretext of principal and interest, it was found. Converted to an annual interest rate, it reached 7,300%. In this way, through April of the following year, they allegedly pocketed unjust interest over 83 instances by applying annual rates ranging from 1,600% to 24,000%.
A and others argued that it was not illegal private financing because part of the period of the offenses was covered by their registration as a credit business. However, the court did not accept their claims on the grounds that they neither entered into lend contracts under the credit company's name nor used proper channels, instead using burner phones and shell accounts in the process of concluding lend contracts and during lending and repayment.
Sentencing them to prison, the court said, "Not only did they operate an unregistered credit business and collect illegal interest at extremely high rates, but this crime, which disguised criminal revenue, undermines financial transaction order and further burdens economically vulnerable debtors, causing great social ills."
However, they were acquitted of the charges of joining and engaging in a criminal organization. The court determined it was difficult to conclude that their activities had a system or structure sufficient to distinguish them from co-principal offenders.