"Elderly's Pocket Money Also Stolen" Welfare Equipment Import and Sales Business Caught

Price Inflation of Chinese Welfare Equipment and More
137 Offenses Committed from 2019 to Last Year
Fraudulent Acquisition of 6.3 Billion KRW by Exploiting Insurance Fund Support
Elderly Actual Users Also Suffered Damage

A gang that inflated the prices of imported welfare equipment such as adult walkers to embezzle the pocket money of elderly people and insurance funds was caught by customs authorities.

On the 22nd, the Busan Customs Office of the Korea Customs Service announced that it had identified Mr. A (in his 40s) and his accomplice Mr. B (in his 50s) on charges of violating the Customs Act and the Act on the Regulation of Concealment of Criminal Proceeds, and sent them to the prosecution without detention.

Provided by Korea Customs Service

According to Busan Customs, Mr. A is suspected of inflating the prices of welfare equipment during the import process, reporting higher prices to customs, remitting the corresponding payments abroad, and then bringing the funds back into the country through a method known as hawala. Mr. B assisted Mr. A in laundering the funds.

Investigations revealed that from August 2019 to October last year, Mr. A imported about 100,000 elderly welfare products, including Chinese-made bath chairs and adult walkers, in 137 transactions using this method. The prices were falsely reported at about twice the actual price.

After declaring the import price of Chinese welfare equipment as 10.5 billion KRW, which is higher than the actual import price of 5.6 billion KRW, Mr. A remitted 10.5 billion KRW, including the difference of 4.9 billion KRW, to a paper company C that he had established in advance. Through company C, the actual import price was paid to the Chinese exporter. Company C was found to have been established in Hong Kong by Mr. A for the purpose of inflating import prices (disguised as intermediary trade).

Provided by Korea Customs Service

The problem lies in the fact that for welfare equipment mainly purchased by the elderly, 85% of the product price is supported by the Deaf Long-term Care Insurance fund, and insurance benefits are calculated based on the sales price, which includes the import price and other costs.

In fact, Mr. A and others applied for insurance benefits from the National Health Insurance Corporation based on distribution costs calculated on the inflated import prices, thereby fraudulently embezzling about 6.3 billion KRW from the Elderly Long-term Care Insurance fund.

During this process, accomplice Mr. B helped disperse the difference of 4.9 billion KRW into about 20 accounts under the names of Mr. A’s wife, children, acquaintances, etc., through hawala and disguised the funds as exports of industrial safety products to Hong Kong (money laundering) to bring the money back into the country.

Provided by Korea Customs Service

The crimes committed by Mr. A and others did not stop at embezzling insurance funds. Due to the inflated import prices of welfare equipment, actual users also faced out-of-pocket costs that increased by about twofold.

A Busan Customs official said, “Mr. A and others imported and sold welfare equipment mainly used by elderly people, embezzling public funds and the pocket money of the elderly for personal gain,” and added, “Customs will strengthen crackdowns to prevent the recurrence of such malicious crimes.”

Meanwhile, since 2015, the Korea Customs Service has been receiving welfare equipment benefit-related data from the National Health Insurance Corporation semiannually, and since last year, it has additionally received market survey results on welfare equipment distribution prices to conduct related crackdowns.

Mr. A and others were identified and cracked down on based on analyses of export-import declaration details and foreign exchange flows, using the supply prices of the suspected companies provided by the National Health Insurance Corporation to the Korea Customs Service.

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