'Pretending to Invest in Mask Companies' 7 Funding Company Officials Indicted for Embezzling 16.1 Billion Won

Annual 15% High Returns, Principal Guaranteed Investment Recruitment
Transferring Money to 45 Paper Companies Pretending to Invest

Six current and former representatives of a P2P lending platform company have been brought to trial for deceiving investors into believing they were investing in a famous mask manufacturer and embezzling approximately 16.1 billion KRW through crowdfunding. Crowdfunding is an investment method that raises funds from an unspecified large number of people online.

[Image source=Yonhap News]

On the 3rd, the Criminal Division 4 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jo Man-rae) announced that seven people, including B (41), the former CEO of P2P lending platform company A Funding, were indicted on charges of fraud. The former CEO was sent to trial while in custody. P2P lending is a form of loan where borrowers and loan purposes are posted mainly through online platforms, and funds are collected from an unspecified number of people to lend money and earn profits by receiving interest.

According to the prosecution, from April to August 2020, they posted false P2P loan products online through the P2P lending platform A Funding and used fake collateral to embezzle a total of approximately 16.1 billion KRW from 896 victims. They attracted investors by promising high returns of 15% per annum and principal guarantees. The amount of damage per victim was up to 349.32 million KRW, which did not exceed the 500 million KRW threshold for fraud under the Act on Aggravated Punishment of Specific Economic Crimes, so the charge was fraud.

They fabricated the appearance of investing in promising mask manufacturing companies through loan products and transferred money to 45 nominal borrower companies, which were paper companies. B managed the accounts of these 45 paper borrower companies and used the deposited victim funds for rolling over debts or arbitrary use. The prosecution found that as they maintained and expanded the business through rolling over debts, they continuously developed fake loan products, increasing the number of false borrower companies.

P2P Loan Platform Company A Funding Crime Structure / Data = Seoul Southern District Prosecutors' Office

The current CEO C (46), who was also indicted, blinded detailed information such as borrower company names on the A Funding website to prevent victims from verifying information.

A Funding’s cumulative loan amount reached 390.5 billion KRW, and victims have yet to recover a total of 46.3 billion KRW. The prosecution stated that investigations into additional damages will continue.

A prosecution official said, "Although it appeared to be P2P finance, in reality, it was a Ponzi scheme that deceived ordinary people by using fake loan products and false collateral as bait to embezzle funds, continuously committing crimes through rolling over debts and causing numerous victims. This was uncovered through supplementary investigations by the prosecution."

This content was produced with the assistance of AI translation services.