Defectors duped in huge scheme

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Defectors duped in huge scheme

Coming from communist North Korea, where the Kim Jong-un regime owns almost all means of production, Mr. Kim found the capitalist nature of the South hard to comprehend. That lack of understanding cost him a lot last year, when he fell victim to a nationwide fraud case and lost 100 million won ($92,370).

In the case involving Han Pil-su, a North Korean defector turned businessman who formerly headed Hansung Trading, the 50-year-old is accused of having duped 400 people - many of whom are also defectors - into putting forth 10 billion won in investments.

Local police officers are still searching for the suspect, who is believed to have fled to China.

“Defectors are frequently swindled because many of them lack knowledge about investment and finance,” said Kim, who wished that his full name be withheld. “Among those who were ripped off last year, some even attempted suicide.”

In his case, Kim said, his fiance left him.

In a separate case earlier this month, when a group of refugees sued the head of a social enterprise over alleged fraud charges, many activists here claimed the defectors’ ignorance about the South’s economic system had once again taken its toll.

“Some 100 defectors, many of them between 70 and 90 years old, lost billions of won in the scheme,” said Kim Mi-hwa, who heads a local civic group that advocates for the rights of elderly North Korean escapees.

The activist explained that the alleged suspect, who is also surnamed Kim, told the victims he would provide a 10 percent incentive for their investments after writing them each a promissory note.

In response to the suit, Kim cited the staggering financial conditions of his company as the reason why he couldn’t pay them their interest and added he would begin making those payments starting in July.

“I thought a promissory note was a piece of paper formalizing that when I loan someone my money, that person would compensate me with interest,” said Kim Byeong-ju, a 59-year-old refugee who paid 40 million won.

Jang In-suk, 70, said she thought a promissory note was a formal agreement holding the company accountable for her investment should it go bankrupt. In explaining why so many North Koreans demonstrate a weak understanding of the domestic financial system, some experts argue that Hanawon, the state-run resettlement center for defectors, spends too little time educating refugees over its 12-week program.

Relying on fellow defectors with an inaccurate understanding is another reason why many end up falling victim to fraudulent ploys.

“In our community,” said one of the defectors involved in last year’s Hansung Trading fraud case, “those with the loudest voices are often key sources of information.”

BY CHAE SEUNG-KI, YIM JI-SOO, LEE SUNG-EUN [lee.sungeun@joongang.co.kr]

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