Eight apprehended in alleged $1.1 million investment scam targeting social media users

Police apprehended eight people accused of swindling 1.54 billion won ($1.1 million) in an investment scam on Wednesday.

Daejeon Yuseong Police Station said that the eight suspects were apprehended on charges of defrauding victims in purported investment funds. Six were detained, while two were referred to prosecutors without detention.

The group consisted of seven men and one woman — four Chinese nationals and four Korean nationals.

The suspects, including a Chinese national who allegedly managed the group's operations in Korea, recruited investors through stock-related posts on social media platforms and YouTube beginning early this year, according to police. They advertised that participants in their investment projects could earn returns of up to 100 percent and allegedly collected cash and gold bars from five victims.

Some of the members allegedly joined the operation after being approached with offers of "high-paying part-time jobs." They initially received between 500,000 won and 800,000 won per assignment before eventually quitting their regular jobs to work for the group full time, police said.

Investigators found that the alleged ringleader and others — ethnic Koreans from China who entered Korea on family-visit visas — persuaded victims to invest in cash and gold bars. The ring allegedly told would-be investors that “intervention by financial authorities could result in investments being liquidated and limits being imposed on withdrawals.”

Members allegedly tasked with collecting the money met victims while wearing forged employee identification cards bearing the names of well-known Korean or foreign securities firms. They collected cash and gold bars after showing victims fraudulent investment certificates.

The group also allegedly created a fake application displaying deposits and purported investment returns to make the investments appear legitimate.

The victims, including office workers and homemakers, discovered the alleged fraud either through online searches shortly after investing or after they were unable to withdraw their money and lost contact with members of the group.

One victim lost as much as 1.3 billion won.

After receiving reports of the scam, police posed as investors and sent the suspects documentation for gold bars to avoid raising suspicion before arranging an in-person meeting. Officers arrested a group member at the meeting site while the suspect was allegedly attempting to flee after receiving the gold bars.

Police recovered 250 million won in losses during the operation.

Police believe the leader of the organization is currently in China. The group allegedly used Telegram group chats to assign separate roles for collecting and transporting cash while preventing members from learning one another's identities.

Operating through a compartmentalized structure, members responsible for recruiting victims, transporting money, laundering proceeds and making deliveries allegedly only identified one another by their physical appearance when meeting to exchange cash and gold bars.

The group also allegedly laundered cash by depositing and withdrawing it at casinos in Seoul and Incheon to mix up the serial numbers of the banknotes.

Police are expanding their investigation, believing that additional members may have participated in the scheme along with the alleged ringleader.

"This was a typical fraud scheme in which victims were deceived with promises of high returns on stock investments and swindled out of large sums of money," said Kim Ri-won, head of the investigation division at Daejeon Yuseong Police Station.

"People should exercise particular caution when they are encouraged to invest with promises of high returns through group chats or social media, as such offers are highly likely to be scams."

BY SHIN JIN-HO [shin.woojin@joongang.co.kr]