Borrowed 16 Million Won, but Interest Alone Came to 800 Million ... Illegal Loan-Sharking Ring Charging 36,500% a Year Arrested

[Financial News] A group that approached thousands of people, including small business owners and vulnerable members of society, offering small, short-term loans without face-to-face contact and charged interest rates reaching tens of thousands of percent a year has been arrested.

On the 11th, the Metropolitan Criminal Investigation Unit of the Gyeonggi Nambu Provincial Police Agency’s Metropolitan Investigation Division said it had arrested a total of 202 people on suspicion of violating the Loan Business Act and forming criminal organizations, among other charges, and referred them to the Suwon District Prosecution Office. They included 59 people from 19 illegal private lending firms, one customer database distributor, and 142 people who had improperly registered loan businesses. Eight people, including A and other ringleaders of six criminal organizations, were referred in custody; the remaining 194 were referred without being detained.
The 59-member illegal lending group, including A, who is in their 30s, is suspected of illegally lending about 28.5 billion won to 8,049 prospective borrowers in 33,348 transactions from January 2022 through this August, without registering as a lending business, and pocketing 22.6 billion won in interest.
They bought personal information through Telegram and other channels, then approached victims under the pretext of offering small, short-term loans without face-to-face contact. Investigators found that when borrowers missed repayment deadlines, the group charged daily extension fees of 50,000 to 60,000 won or late fees of 10,000 won per hour, imposing interest rates as high as 36,500% a year. That meant demanding 400,000 won in same-day repayment from someone who had borrowed 200,000 won.

The group also encouraged debtors struggling to repay to engage in what is known as “rolling over” debt. One victim who borrowed about 16 million won reportedly borrowed a further 590 million won in 337 transactions after A’s group steered them into rolling over their debt; the interest alone came to about 830 million won.
The group also required borrowers to provide resident registration documents, family relation certificates, and contact information for relatives and acquaintances as a condition of the loans. When borrowers fell behind on payments, the group sent threatening texts and repeatedly engaged in illegal debt collection.

To evade investigators, they used aliases and Telegram, and relied on burner phones registered under foreign nationals’ names and burner bank accounts under other people’s names. Investigators found that members met in person and divided the proceeds only in cash. When police began investigating, they also threw their phones out of moving cars to destroy evidence.
Police applied the charge of forming a criminal organization to 32 people at six firms that had offices and customer databases and had committed crimes in an organized manner, with ringleaders, managers, and counselors. Police also took pre-indictment measures to preserve about 16.4 billion won in criminal proceeds from 36 suspects. Of that amount, assets worth about 5.3 billion won—including eight properties such as apartments and officetels worth about 5 billion won, and 20 expensive imported cars worth about 300 million won—were placed under a ban on disposal.
B, a customer database distributor in their 30s who was detained alongside the others, is suspected of setting up 18 fake loan brokerage websites, collecting personal information directly, and selling it to illegal private lending groups. The information he collected covered about 41,000 people.
Investigators found that B earned 22.5 million won a month by passing this information to lending companies at a rate of 70 to 80 records a day.
Police also identified and referred 142 people who had improperly registered as lenders after setting up fake offices to collect databases of prospective borrowers, based on comprehensive inspections by local governments.
A police official urged the public: “Please be especially cautious of calls or text messages offering loans, including claims that short-term, small-amount loans are available.”
[email protected] An Ga-eul Reporter