CHANGWON — South Gyeongsang Provincial Police said on the 15th that they had referred 16 people, including a 33-year-old ringleader surnamed A, to the Changwon District Public Prosecution Office (formerly the district prosecutors' office) on charges of violating the Lending Business Act and the Fair Debt Collection Act. The ring charged interest of up to 20,000% a year and pressed borrowers by spreading false claims to their families and acquaintances. Ten of the 16 were detained.
Police plan to add charges of organizing and participating in a criminal group under the Criminal Act against eight senior members whose chain of command and division of criminal proceeds have been confirmed.
The ring set no fixed interest rate. In one confirmed case, a borrower who took out 2 million won repaid 3.1 million won a day later. On an annualized basis, that works out to as much as 20,000%. The legal ceiling is 20% a year.
According to police, A and his associates in their 20s and 30s, connected through personal ties, searched for targets from July last year through September this year using loan inquiry databases bought from Telegram channels selling personal data. They drew in victims through Instagram direct messages and bulk overseas text-messaging services. The victims were low- and middle-income people aged from their 20s to over 60 who had difficulty borrowing from licensed lenders.
Operating without a fixed office, the group moved between cafes and other spots around Daegu and North Gyeongsang Province, handling loans and collections remotely through messaging apps and phones registered under other people's names. Loans ranged from 200,000 won to 5 million won.
Their collection tool was the borrowers' personal relationships. Members exploited borrowers' reluctance to provide full-body photographs or sign contracts, taking the contact details of acquaintances and family members' bank account numbers instead of collateral.
If a borrower missed even a single day's interest payment, the group threatened to call and text the family members, friends and co-workers whose contact details it had collected. Threatening messages confirmed by police included false claims that "the debtor borrowed money as a settlement for illegally filming a sexual encounter and has not paid it back," that the borrower "borrowed money for an abortion and skipped out on it," and that the borrower "sold an acquaintance's personal information to take out a loan."
Borrowers who handed over family members' account numbers were told the group would "deposit proceeds from phone scams into your family's accounts and get every one of their financial accounts frozen." A police official said the group "wrecked victims' daily lives with dozens of messages and phone threats."
Police found that the group lent 7.6 billion won over 14 months and took 2.5 billion won in illegal interest. An analysis of 18 bank accounts opened under other people's names identified 332 victims, 28 of whom gave statements. Because victims were reluctant to come forward for fear of retaliation, police believe the actual scale of the damage is larger.
South Gyeongsang Provincial Police opened the investigation in July after receiving a tip. After tracing 55 phones and 18 bank accounts registered under other people's names to identify eight members, officers raided their homes and arrested A and other leaders on the same day. At the scene, police seized 200 million won in cash believed to be criminal proceeds and 26 of the phones.
Police have applied for pre-indictment confiscation and preservation of the criminal proceeds, and are investigating the source of the group's initial funding and looking for additional victims. Victims are being referred to support programs including debt restructuring through the Credit Counseling and Recovery Service.
Kim Wan-soon, head of the third major crimes section at South Gyeongsang Provincial Police, said, "We will respond firmly and with zero tolerance to illegal private lending crimes that threaten low- and middle-income people with brutal debt collection and interest above the legal ceiling."
