Ponzi Scheme Worth 100 Billion KRW Using "Parasite" Investment Success... Former CEO of Investment Firm Arrested and Indicted

A former investment firm CEO accused of inflating the success of the movie 'Gisaengchung' investment and committing a Ponzi scheme worth 100 billion won has been indicted while in custody. A Ponzi scheme is a multi-level financial fraud that deceives new investors by pretending to generate profits and uses the investment funds from new investors to pay returns to existing investors.

[Image source=Yonhap News]

On the 21st, the Criminal Division 4 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Kim Jeong-guk) announced that they have indicted Um Mo (41), former CEO of Changjo Investment Advisory, on charges of fraud under the Specific Economic Crimes Act, violation of the Act on the Regulation of Similar Financial Transactions, and violation of the Capital Markets Act. Additionally, nine accomplices, including three golf players involved in recruiting investors, were also indicted without detention on charges including violation of the Act on the Regulation of Similar Financial Transactions.

According to the prosecution, Um and Changjo Investment Advisory team leader A (38) are accused of deceiving 48 victims into believing they were earning profits through unlisted stock trading from June 2018 to last February, while paying principal and profits in a Ponzi-like manner, embezzling a total of 108.6 billion won in investment funds. Um and his accomplices are also accused of recruiting 38 investors with promises of principal guarantees and returns of 5-30%, collecting a total of 78.6 billion won during this period using the same method.

The prosecution found that Um and others deceived victims by claiming there was a way to earn arbitrage profits through unlisted stock trading, citing the success of the 'Gisaengchung' investment, but in reality, they suffered losses of about 36.7 billion won from unlisted stock investments, and the total movie investment returns amounted to only 100 million won. The investment amount for 'Gisaengchung' was 100 million won, but the recovered amount was 290 million won.

They also paid commissions to three golf players with domestic competition awards for recruiting investors, provided golf entertainment, and used networks built by Um while attending a university's advanced executive program to recruit investors. Among them, three victims suffered fraud losses exceeding 10 billion won each.

A prosecution official stated, "To confiscate the criminal proceeds of the defendants and restore the victims' losses, seizure and preservation measures have been completed on properties owned by Um, including land, houses, and motorcycles, as well as on the lease deposit refund claims owned by A."

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