"If You Open a Phone Line, We'll Give You a Loan"... Gang Arrested for Embezzling 6.4 Billion Won Through 'Hyudaeponkkang' Scheme

140 Members of Crime Group and 17 Accomplices Referred
Targeting Low-Credit Loan Applicants

A gang that recruited low-credit individuals in need of loans, had them activate mobile phones, and then resold the devices and SIM cards to embezzle more than 6.4 billion KRW was apprehended.

Device sales contract and box phone used in the 'Mobile Phone Kkang' crime
[Photo by Lee Seohee]

On the 16th, the Seoul Metropolitan Police Agency's Criminal Mobile Unit announced that they had sent 140 members of the gang (8 arrested) to prosecution on charges including organized crime group activities, fraud, and violations of the Telecommunications Business Act. An additional 17 accomplices, including mobile phone buyers and store owners (1 arrested), were also sent to prosecution on charges such as receiving stolen goods and violations of the Personal Information Protection Act.

According to the police, the suspects are accused of recruiting low-credit individuals in urgent need of funds from November 2019 to April this year, having them activate mobile phones, then selling the devices to stolen goods dealers and distributing SIM cards to phishing organizations, a method known as "mobile phone kkang," embezzling 6.4 billion KRW.

The ringleaders, including a man in his 30s identified as Mr. A, registered 50 loan companies around Gumi, Daegu and Gyeongbuk, and set up call center offices for consultations, creating the appearance of legitimate loan businesses. They then contacted victims who responded to internet advertisements, proposing, "Your general loan application was rejected. If you activate a mobile phone, we can purchase it and provide you with funds."

The victims activated the latest mobile phone devices worth up to 2.5 million KRW each under 2-3 year contracts, but investigations revealed that 63% of them failed to pay the installments and became delinquent.

The gang paid between 400,000 and 1 million KRW per device depending on the model to the registered owners, then sold the devices to stolen goods dealers and distributed the SIM cards to criminal organizations involved in voice phishing, gambling, and chat room scams to generate profits. They operated systematically with internal guidelines such as "Use aliases," "Maximize profit margins," and "Activate at least two devices per customer."

The total number of registered owners used for mobile phone activations reached 2,695, with 3,767 phones activated in total.

The police discovered clues to the case while investigating the "Gangnam drug beverage incident" in April last year, tracing the illegal activation and distribution of SIM cards, and launched an investigation in January this year. During the investigation, assets worth approximately 1.126 billion KRW, including cash, gold bracelets, and vehicles, were seized before prosecution, and 4.857 billion KRW was confiscated. This is the largest single case to which the criminal group provisions of the Criminal Act have been applied.

The police stated, "Mobile phone kkang is a criminal method that exploits the identities of people who cannot obtain loans through formal financial institutions due to economic difficulties to gain unfair profits. The phones activated in this way can be used in various crimes such as voice phishing, making it a very serious crime. We will continue to investigate other crimes involving the purchase of SIM cards from the suspects and their use in voice phishing and other offenses."

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