Over 900 People Defrauded of 5.2 Billion Won on P2P Site... Former and Current CEOs Indicted
[Asia Economy Reporter Jeong Dong-hoon] A group accused of embezzling billions of won from hundreds of individual investors through false investment products has been brought to trial.
The Seoul Northern District Prosecutors' Office Health and Juvenile Crime Task Force (Chief Prosecutor Lee Jeong-ryeol) announced on the 12th that former CEO A (37) of a P2P lending platform company and affiliated lending company was arrested and indicted on charges of fraud, while co-conspirator and current CEO B (39) was indicted without detention.
P2P lending operates by posting specific loan products online to gather investment funds from an unspecified number of people, lending to specific borrowers, and then distributing the principal and interest received from those borrowers back to the investors.
They are accused of posting false investment products on the P2P lending platform site from June 2017 to June 2018, embezzling 5.25288 billion won through 1,394 transactions from about 900 victims. Mr. B is also charged with embezzlement (breach of trust) for using 908.75 million won of the loan principal and interest repaid by borrowers from June 2018 to January 2019 as company operating funds.
According to the prosecution, they directly operated lending companies affiliated with the platform company and abused the P2P lending system to carry out fraudulent activities.
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They publicly announced that the investment funds would be loaned to real estate business borrowers to be used as funds for new real estate purchases, but the borrower was a family member of Mr. A, and 70 million won of the investment funds was used for company operating expenses. Despite no pledge being set on the borrower's trust beneficiary rights, they concealed poor collateral with false information claiming that about 56 billion won worth of collateral was secured and continued to attract investments.
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