[Exclusive] Real Estate Auction Instructor Faces Fraud and Illegal-Fundraising Complaint After Soliciting Funds with Promises of 10% Annual Returns and Principal Repayment

[Financial News] Instructor A, who has run real estate auction classes, has been reported to police on suspicion of fraud and illegal fundraising in connection with soliciting funds from students while promising annual distributions of 10% and repayment of principal. The complainants allege that A raised the funds by leveraging the trust built through classes and member gatherings, then operated a so-called rollover scheme by using money from new participants to pay distributions and principal to existing participants.
According to Financial News' reporting on the 23rd, A was recently reported to police on suspicion of fraud and illegal fundraising. YK Law Firm is representing the complainants.
A is believed to have built relationships with students through a YouTube channel and real estate auction classes. The complaint also states that A became known as a real estate auction expert through television appearances and published books.
According to the complainants, A solicited funds from students under names such as "Happy Member" or "Happy Fund," with each unit requiring 10 million won. Participants were reportedly told that they would receive annual distributions of 10% and that their principal would be returned if they gave advance notice that they wanted it back.
One complainant claimed to have been told that annual interest of 10% would be paid twice a year after withholding taxes were deducted. Regarding how the funds were managed, the complainant said they were told that the money was lent to other members who needed emergency cash and that profits were generated from the interest.
The complainants said they came to trust A as a real estate auction expert and a businessman capable of managing funds through their participation in classes, online community activities, member gatherings and consultations.
One complainant said they paid A a total of 280 million won from October 2023 through last December. Another complainant claimed to have paid a total of 110 million won from August 2023 through last May. The complainants' side said that although some of the money was returned along with distributions, principal remained unrecovered when the complaints were filed. It was also alleged that funds continued to be solicited after the initial fundraising under various pretexts, including an interim payment for an office building, short-term fund management and lending operations. 
The key evidence presented by the complainants in support of the fraud allegations concerns the actual structure of the fund management. One complainant alleged that at a gathering of members last month, A said he had been using money received from members in a so-called rollover scheme to cover past debts and costs needed to operate his academy. Another complaint also alleged that A himself had said he managed the funds by using money received from new participants to pay distributions and repayments to existing participants.
The complaint stated that more than 100 participants have been identified so far and that total losses are estimated at more than 15 billion won. 
Jang Il-hee, an attorney at YK Law Firm and a former senior prosecutor, cautioned, "Cases are increasing in which middle-aged and older people interested in financial planning and real estate investment are first led to build sufficient rapport, or a relationship of trust, through auction academy classes and are then defrauded through sophisticated and organized schemes. Such cases require particular caution."
Jang continued, "Victims can easily mistake the scheme for a legitimate investment because of the perpetrator's YouTube activities or the outward appearance of an auction academy. They may fail to recognize that they are being defrauded even as they suffer continued losses over a considerable period. By the time victims recognize warning signs, it is often already too late, so the most important thing is to take civil and criminal legal action without missing the critical window of opportunity." 
The reporter made repeated attempts to contact A for his response, but was unable to reach him.
[email protected] Yoo Seon-jun Reporter