In hard times, scam preys on people’s hopes

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In hard times, scam preys on people’s hopes

Ilsan police in Gyeonggi, announced Wednesday they investigated a group of con artists for cheating investors out of 4.6 billion won ($3.9 million). The victims were told they were taking part in a profitable shopping mall in Cambodia.

The nine swindlers mainly targeted older adults and housewives by setting up an office disguised as an investment company in Yeongdeungpo, southwestern Seoul. They attracted about 173 victims from April 2013 to August 2013.

According to the police investigation, the con artists told potential targets they would be able to earn 1.2 percent returns on the money they put down. They were able to target further victims by telling them they could earn additional returns of 0.2 to 0.3 percent if they brought in more “investors.”

They set up three more branches in Cheongju in North Chungcheong, Chuncheon in Gangwon and Daegu, and held sessions for older adults and housewives, and in order to entice victims to invest further, the company paid out 1.2 percent “returns.”

But the company never used the money to invest in a shopping mall in Cambodia. Instead, they used the used money from later victims to pay so-called returns to earlier ones. The rest went into the pockets of high-level company managers.

“Among the victims who were told they can reap high returns even if the business didn’t make additional profit, there was even one elderly victim who invested all his assets,” said the director of the Ilsan police’s intelligence team, Jang Jong-ik. “Our investigation revealed the victims lost between six and 700 million won.”

South Korea’s interest rate has been steadily decreasing, from three percent in July 2012 to 1.5 percent in March 2016. Such low interest rates, together with Korea’s current economic downturn, make it easier for swindlers to lure people with investment schemes promising high returns.

The police have promised to expand their investigation to catch similar lawbreakers who capitalize on the nation’s times of economic difficulty.

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