Supreme Court Rules Recruiters Can Be Found Guilty of Intent in Pyramid Scheme... Overturns Renbel Capital Acquittal

Recruiter Promised Principal Guarantee Despite Knowing About Withdrawal Suspension
Fraudulent Conduct Recognized
Renbel Capital Operated a Ponzi Scheme
Paid Existing Investors With New Funds
Lower Courts: “Possible Unawareness of True Nature” ? Acquittal
Supreme Court: “Violation of Logic and Experience”
“Could Have Recognized as a Pseudo-Financial Company”
Stricter Criteria for Determining Fraudulent Intent

Yonhap News Agency

The Supreme Court has overturned a lower court’s acquittal of a mid-level recruiter involved in the “Renbel Capital case,” a multi-level pyramid scheme disguised as a Bitcoin investment company. The ruling clarified that even if someone is not the mastermind but a recruiter, intent to commit fraud can be recognized if they were sufficiently aware, through the investment structure and the flow of funds, that the company’s operations were based on a Ponzi scheme.

According to the legal community on December 3, the First Division of the Supreme Court (Presiding Justice Shin Sookhee) overturned the not-guilty verdict and remanded the case to the Daejeon District Court, stating, “There is ample reason to believe that the defendant, who acted as a recruiter, was at least tacitly aware that Renbel Capital was a pseudo-financial company paying returns to existing investors from the funds of new investors, without any actual profit-generating structure.”

This recruiter, after being introduced to Renbel Capital by a higher-level investor in 2018, opened an office in Seo-gu, Daejeon, and recruited about 50 lower-level investors, including the victim. He told the victim, “After 10 months, the principal will be settled based on the increased price, and even if the price drops, your principal is 100% guaranteed.” He also explained, “After listing, you will receive a real-life token, and if you bring in others, you will receive a referral commission.” Based on these promises, he received a total remittance of 46.07 million won.

However, Renbel Capital operated as a typical Ponzi scheme, paying returns to existing investors with funds from new investors. From around December 2018, the company effectively lost its ability to make payments due to the suspension of its website and withdrawal services. Both the first and second trials acquitted the defendant, stating, “It is difficult to conclude that the defendant was aware of the true nature of the company, and there is insufficient evidence to recognize that he knew there was neither the intention nor the ability to pay the principal or returns to the victim.”

In contrast, the Supreme Court reached a different conclusion. It focused on the fact that the recruiter personally gathered dozens of investors and used their funds to pay returns to higher-level investors. The Court also noted that, despite being fully aware of the suspension of withdrawals from the end of 2018, the recruiter continued to promise principal guarantees and high returns to the victim without disclosing this situation, thus constituting fraudulent conduct.

The Supreme Court stated, “Considering the defendant’s position and role, the method of fund management, and the situation regarding the suspension of withdrawals, it is reasonable to conclude that the defendant could have recognized Renbel Capital as a pseudo-financial company operating through a multi-level structure.” The Court criticized the lower court’s decision, saying, “The original verdict violated the rules of logic and experience, exceeding the limits of the principle of free evaluation of evidence.” As a result of this decision, the case will be retried at the Daejeon District Court.

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