Victims in pyramid scheme team up to track down con artist

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Victims in pyramid scheme team up to track down con artist

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Earlier this month, Jeon Se-hoon, 33, received a call at his office in Gaebongdong, western Seoul.

“I think it’s him,” he responded after listening to what the caller had to say. “Get a team together and chase after him.”

Kim Sang-jeon, 46, the man who phoned Jeon, was heading to Busan when he was tipped off about the whereabouts of the man the two having been chasing for six years.

They, along with more than three dozen others, are pursuing an extraordinary con artist by the name of Jo Hee-pal, who exploited about 4 trillion won ($366 billion) from more than 40,000 people in a pyramid scheme played out from 2004 to 2008.

But Jeon and Kim aren’t police officers. Rather, they are both members of the Citizen’s Coalition for Respectable Household Economy (CCRHE), an informal and atypical entity organized by those who suffered losses in Jo’s scam. Currently, about 40 of its members are working to track him down.

Jeon became involved in the effort after his mother lost hundreds of millions of won in Jo’s pyramid scheme, and Kim, his colleague, heads the organization.

“Pursuers range from those in their 20s to those in their 60s, some of whom are victims or the children of victims,” Kim said. “When we find Jo’s hidden assets, we report them to the prosecution or the police.”

In July 2013, the Daegu District Prosecutors’ Office resumed its efforts to track down Jo’s hidden assets, which add up to 76 billion won, and authorities have so far rounded up six people believed to have a connection to the case.

The renewed investigation, however, was prompted by a report from the coalition. CCRHE members always carry laptops so that they can hold video conferences at a moment’s notice. As soon as the members receive information, they immediately share it. The facts they acquire are then stored at the CCRHE headquarters.

According to public information, Jo was born in 1957 to a poor family living in the small town of Yeongcheon, North Gyeongsang. He moved to Daegu alone after finishing high school, hoping to earn enough to support his family.

After making a living during his teenage years working as a day laborer, he worked at a betting house, where he hung out with members in Dongseongro-pa, the biggest gang in the region. Then Jo joined SMK, the country’s first pyramid scheme company.

As he learned more about the scheme, he raised funds from about 10 acquaintances and established his own Big Mountain Company (BMC). He persuaded others to invest to his business, claiming that BMC would pay to its shareholders dividends earned from lending out medical equipment.

He insisted that their 4.4 million won investment would be returned on top of the dividend - about 5.8 million won, with a 32 percent rate of return - over eight months.

The scam took off and the wealth poured in, so Jo set up separate companies in Seoul, Busan, Incheon and other regions to avoid police detection.

“The medical equipment business was just a guise for his pyramid scheme,” said a police officer who investigated Jo’s case in 2008. “His main targets were women in their 40s to their 60s, most of whom weren’t very familiar with finances.”

As the con man became richer, he spent most of his time indulging three personal vices: women, golf and gambling. Other times, he bought drugs or luxury goods, including BMW sedans and Rolex watches.

“He was a swindler, but he took good care of himself,” said Kim, CCRHE’s director. “He used to give gifts to the apartment complex guards, and he was also kind to his neighbors. When he turned out to be a scammer, people didn’t believe it at first.”

Jo paid those who invested in his business with funds from other investors who came in later - common practice in pyramid schemes that make them unsustainable - and soon found himself at a dead end.

Those who lost their money lodged formal complaints, and his scheme was eventually brought to light in October 2008. Jo and his aides are known to have bribed investigators to close the case, and one prosecutor was even questioned over suspicions that he took hundreds of millions of won from the swindler.

Three months later, on Dec. 9, 2008, Jo stowed away to China from Taean County, South Chungcheong, giving 70 million won in cash to a ship owner. While there, he posed as a businessman and frequently enjoyed golf. He avoided his chasers by buying upwards of three houses and moved in between one and the others. He also bought a fake ID.

Once, an officer from the Daegu Police Agency was even found to have visited Jo in China, where they played golf together.

But whether Jo is alive is part of an ongoing debate.

The police announced that Jo died of cardiac arrest in December 2011, in a hotel in Weihai, China, and added that his body had been cremated and a gravesite set up near his home in North Gyeongsang. His remains, they said, were unidentifiable.

However, his 40 pursuers believe that he is far from dead, and plan to report additional evidence proving that he is alive and still has hidden assets. The name registered on Jo’s alleged grave marker is Jo Yeong-bok, the pseudonym he acquired on the mainland, and the tombstone is also marked as a family site.

Documentation is also unclear. A death certificate reportedly verifies that the conman died, but because forgery prevails in China, his victims argue that it is likely a fake.

Since then, some have claimed that they’ve seen Jo - once in Daegu, or at a coffee shop in Busan. One of Jo’s aides, who worked as his body guard in China, also has yet to return to Korea.


BY KIM YOUN-HO [bongmoon@joongang.co.kr]



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