A ring of lenders accused of pocketing illegal loan interest with annual rates as high as 24,000% was sentenced to prison.
According to legal sources on the 15th, Judge Park Dong-uk of the Chuncheon District Court's Criminal Division 3 single-judge panel sentenced five people, including a person surnamed A (43), to eight months to one year and eight months in prison on charges of violating the Lending Business Act, the Electronic Financial Transactions Act, and the Act on Regulation and Punishment of Criminal Proceeds Concealment.
A and others, who did not register as formal lending businesses, are accused of entering into lending contracts with victims who contacted them after seeing ads for "non-face-to-face quick loans" on a loan brokerage site, and then collecting high-interest loan interest after obtaining the victims' facial photos or contacts of acquaintances.
For example, A and others were found to have lent 300,000 won for five days in Nov. 2024 and received 600,000 won in repayment labeled as principal and interest. Converted to an annual interest rate, it came to 7,300%. In this manner, through Apr. the following year, they allegedly pocketed unjust interest by applying annual rates ranging from 1,600% to 24,000% over 83 instances.
A and others argued that it was not illegal private financing because part of the period of the offenses overlapped with their registration as a lending business. However, the court did not accept their claim on the grounds that they did not enter into lending contracts under the lending company's name and used burner phones and burner accounts in the processes of contract execution, lending, and repayment.
In sentencing them to prison, the court said, "This case did not stop at running an unregistered lending business and collecting illegal interest at very high rates; disguised as criminal revenue, the offenses undermine financial transaction order and further burden economically vulnerable debtors, causing significant social ills."
However, they were acquitted of charges related to joining and participating in a criminal organization. The court found it difficult to conclude that their activities had a sufficient system or structure to constitute an organization distinguishable from co-principal offenders.