"Borrowed Money Due to Store Difficulties" ... Gang of Loan Sharks Charging 27,375% Annual Interest Rate Arrested

“I took out a private loan because it was difficult to run my store, but I couldn't manage the repayment and ended up reporting it.”

In June last year, a self-employed person in Yangsan, Gyeongnam, asked the police for help.

The Yangsan Police Department, which launched an investigation, announced on the 5th that they arrested all 30 members of a high-interest illegal lending operation group, including the ringleader Mr. A and three others who were detained.

Message content sent by illegal loan shark organizations to debtors. [Provided by=Gyeongnam Police Agency]

According to the police, Mr. A and others operated an illegal lending business amounting to 31.5 billion KRW targeting 598 people from November 2021 to October last year by lending money to debtors who contacted them after seeing loan advertisement texts.

The organization secured debtors' personal and credit information, shared and managed it in real-time among four teams within the group, and selectively committed crimes against debtors with high repayment rates.

They sent multiple loan advertisement texts under various names such as ‘○○ Manager’ and ‘□□ Lending’ to induce loans, pretending to be different lenders.

Operating an illegal loan business organization as well. [Provided by Gyeongnam Police Agency]

They applied an average annual interest rate of 7,300%, far exceeding the legal interest rate of 20% per annum, and sometimes charged up to 17,375%.

In the police investigation, one victim borrowed 1 million KRW and paid 1.8 million KRW in interest after just six days, while another borrowed 400,000 KRW and repaid 1 million KRW two days later.

One self-employed person borrowed a total of 160 million KRW from them and had to repay 50 million KRW in interest within two months.

Mr. A and others operated by deducting about 10% of the interest upfront and then receiving equal weekly repayments of principal and interest or full repayment of principal and interest at maturity.

They did not engage in illegal debt collection such as threats to avoid crackdowns by investigative agencies or victim reports.

They also had a code of conduct to systematically make false statements during investigations or pay fines on behalf of members if fined.

Computer screen used for crime by an illegal loan shark organization member. [Photo by Gyeongnam Police Agency]

The group is known to have earned about 6 billion KRW in interest through these methods.

The criminal proceeds from illegal lending were divided with the ringleader Mr. A receiving 60%, team leaders 10%, and team members 30%.

The police, upon starting the investigation, identified the office, secured evidence, and expanded the investigation by confirming the crimes of the ringleader and subordinate teams through evidence analysis, dismantling the criminal group.

Investigation Chief Lee Sang-hoon said, “Illegal private financing is a crime that exploits economically vulnerable citizens,” and added, “We will do our best to eliminate unregistered lending and excessive interest collection crimes.”

He also urged, “When using lending companies, be sure to check whether they are registered, and if you suffer damage from illegal activities, immediately report to 112 and actively seek police assistance.”

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