Stock Fraud Gang Caught After Police Stop... Over 10.8 Billion KRW in Damages and More Than 1,000 Victims

Defrauded Over 1.08 Billion KRW from 1,100 People with False Investment Information
14 Organization Members Arrested, 2 Billion KRW of Criminal Proceeds Seized

A group that deceived 1,120 victims by falsely claiming that unlisted stocks were about to be listed and embezzled 10.8 billion KRW in investment funds was caught thanks to the intuition of an investigator.

On the 26th, the Daejeon Metropolitan Police Agency announced that they had arrested five people, including the ringleader Mr. A (34), on charges of fraud and violations of the Capital Markets and Financial Investment Business Act, and sent a total of 14 members of the organization to prosecution. The members of this group are accused of distributing false promotional materials claiming that unlisted stocks of Company B would be listed at 90,000 KRW per share over a three-month period starting January last year, thereby embezzling approximately 10.8 billion KRW from 1,120 victims under the pretense of investment funds.

Their crime was uncovered in March last year thanks to the intuition of an investigator from the Cyber Investigation Unit. At that time, Mr. C, who was accompanying another fraud suspect to the police station, aroused suspicion by repeatedly circling outside the Daejeon Police Headquarters without parking the vehicle inside. An investigator conducted a random vehicle inspection, which revealed 66 million KRW in cash and six burner phones inside the car. Additionally, text messages instructing money laundering via Telegram were found on the mobile phones.

Mr. C was the money laundering agent for this organization, and the police were able to proceed with an investigation into the illegal investment advisory chatroom by arresting him in the act. Subsequently, by analyzing hundreds of bank accounts and call logs from hundreds of burner phones, the police identified 15 hideouts across the Gyeonggi, Gangwon, Chungcheong, and Jeolla regions. Through search and seizure, they confiscated approximately 2 billion KRW in cash and gradually apprehended the remaining members of the organization.

A representative from the Daejeon Metropolitan Police Agency advised, "In cases of investment advisory chatroom fraud, victims are constantly deceived through various methods such as impersonating celebrities, guaranteeing high returns, and using provocateurs within group chats. Therefore, even if there is seemingly good news about stocks, one should be doubly cautious."

Meanwhile, the criminal plan of this group was organized in a cell structure with Mr. A and others dividing roles as the ringleader, leading sales teams, currency exchange teams for money laundering, and intermediaries delivering criminal proceeds. They exploited the fact that the stock prices of unlisted companies are not transparently disclosed to deceive victims.

Mr. A, the ringleader, had a prior record for similar investment advisory fraud. He targeted 5,000 people who had previously suffered investment losses. They selected Company B as the stock to be used in the crime and received an allocation of 360,000 unlisted shares of Company B. They then provided false information to victims such as "The company is recruiting small shareholders from the general public to prepare for listing," and "It is a company under the technology special listing system, guaranteeing a 300% profit." Believing this false information, victims purchased unlisted shares of Company B, which had a face value of 100 KRW, at about 30,000 KRW per share. The victims ranged in age from their 20s to their 80s. The highest individual loss amounted to 450 million KRW.

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