A loan fraud ring that exploited a government lending program for low-income workers and illicitly pocketed more than 1 billion won was caught by police. It was found that they obtained living-stability loans using forged medical expense receipts and then skimmed part of the loan as a fee.
Jeonbuk Provincial Police Agency said on the 20th that it had arrested and referred three ringleaders, including the head of the loan scam ring, a person identified as A, on fraud charges. Twelve members of the ring and 107 loan applicants who took part in the crime are under investigation without detention.
They are accused of abusing the Worker living-stability fund loan program run by the Korea Workers' Compensation & Welfare Service (K-COMWEL) for about six months from February last year, unlawfully obtaining a total of about 1.05 billion won in loans across 120 instances.
The worker living-stability fund loan program allows low-income workers who need emergency funds due to illness, marriage or death to borrow living expenses at low interest over a long term.
According to police, the ringleader, a person identified as A, set up an office in Uijeongbu, Gyeonggi, and formed three broker cells in Busan, Seoul and elsewhere. It was found that after recruiting applicants who met the loan criteria, they forged medical expense receipts to make it appear the applicants needed treatment costs and had them apply for loans.
The medical expense receipts they submitted to the Korea Workers' Compensation & Welfare Service (K-COMWEL) were confirmed to have been manipulated for amounts, names and dates.
The crew was said to have taken 15%–30% of the loan amount as a fee once the loan was executed.
The investigation found that the three ringleaders provided forged receipts and divided the criminal revenue. Within the organization, intermediaries recruited loan brokers, and the brokers in turn drew in loan applicants, splitting roles to carry out the crime.
Police launched an investigation after receiving a tip that forged medical expense receipts had been filed at the Jeonju, Iksan and Gunsan branches of the Korea Workers' Compensation & Welfare Service (K-COMWEL). They then confirmed that similar loan applications continued nationwide and expanded the probe, uncovering indications of illegal loans totaling in the 1 billion won range.
Police also plan to consult with the Korea Workers' Compensation & Welfare Service (K-COMWEL) on measures to improve the system, including stronger management and oversight.