The Supreme Court ruled that a fake investment site created in Cambodia by a Chinese ringleader to target Koreans for so-called "reading room scams" also constitutes an "unauthorized financial investment product market," which is prohibited under the Financial Investment Services and Capital Markets Act.
The Supreme Court's Second Division (presiding Justice Kwon Young-jun) said on the 5th that it overturned the lower court's ruling and sent the case back to the Seoul Southern District Court on the 30th for Kwon, a person surnamed Kwon, 42, who was indicted on charges of joining a criminal organization, criminal organization activity, fraud, and violating the Financial Investment Services and Capital Markets Act.
A, a Chinese ringleader, formed a "reading room investment scam" criminal organization in Phnom Penh, Cambodia, in January 2024. The group posted investment ads on various social media (SNS) targeting Koreans that said they "guarantee high returns." They invited victims who clicked the ad L.I.N.C to Telegram, Naver Band, or KakaoTalk group chats and had them sign up for a fake investment site they built. There, they pretended to offer block deals or initial public offerings to steal money from victims under the guise of investment funds.
In early March 2024, Kwon received a proposal from an acquaintance: "It's answering calls at an office in Cambodia. There's nothing difficult; just do as you're told. The monthly salary is $8,000 (about 12 million won), so let's work for just one month." Kwon then went to Cambodia, joined the criminal organization, and worked at the customer center. From April to July 2024, the group received remittances totaling 8.43628 billion won from 62 Korean victims as purported investment funds.
Kwon entered Cambodia on Mar. 29, 2024, and returned on May 13 the same year. In Cambodia, Kwon mainly impersonated a female employee, speaking with victims by phone and making it seem as if the staff chatting via Telegram or KakaoTalk actually existed.
During the trial, Kwon argued that the crimes were committed because Kwon could not withstand confinement and assaults by members of the Chinese criminal organization. However, Kwon was free to use a mobile phone after work and traveled back to Cambodia in June 2024, a month after returning to Korea, to meet B, who worked as an interpreter for the criminal group. Citing these points, the appellate court found Kwon's claim untrue.
In the first trial, the court sentenced Kwon to five years in prison and ordered the forfeiture of 709,850 won. The first trial court said, "The defendant has confessed to the crime, and the defendant's direct involvement was limited to part of the offenses," adding, "It appears the defendant left the criminal organization before victims deposited money."
On appeal, the court reduced Kwon's sentence to four years in prison. The first trial court had found Kwon guilty on the grounds that Kwon conspired with members of the criminal organization to open and operate an unauthorized financial investment product market prohibited under the Financial Investment Services and Capital Markets Act.
However, the appellate court acquitted Kwon on the ground that the site they created did not constitute a financial investment product market. Although it linked domestic and overseas stock index data such as KOSDAQ and the Nasdaq in real time, it found that no actual stock or derivatives trading took place using the victims' funds.
The Supreme Court reversed and remanded the part of the lower court's ruling that had found Kwon not guilty. The court said, "Although actual trading of securities and the like did not occur on this investment site, average market participants could perceive that trading was taking place." It added that in such cases the site constitutes an unauthorized financial investment product under the Financial Investment Services and Capital Markets Act and should be punished accordingly.