Fleeced 100 Billion Alleging Venture Capital

A ring of con artists was broken, who cheated 44,253 people out of 100.7 billion won (approximately $84 million). They allegedly attracted their victims by saying that the victims would get a 150% return on their investment. The artists said that they would invest the money into ventures like telecommunications.

▽Fleecing methods= Computer Division of Seoul District Prosecutors` Office announced yesterday that it has arrested and charged 8 people with fraud and other counts, including the CEO of Biz & Persons, Inc. The division has also incited 5 other executives of the company without detention, and put Mr. Chung, the owner of the company, on the wanted list.

The con artists founded the company in February of 2001, and had recruited their victims by guaranteeing them that they would get back 50% of their investments within 5 days, and additional 100% return in installment over 18 months. Contrary to its advertising that their company was a "venture financing company," it had not made any profits at all. They made payments to earlier investors from the money received from the later victims.

Biz & Persons members also manipulated credit card transactions. They disguised the company as an Internet shopping mall, and sold watches ranging from 50,000 to 100,000 won for 2.2 million won, an amount required of each investor. On the face, they sold watches, but, in substance, they made illegal cash advances out of victims` credit card accounts. By paying the promised returns to the early investors, they could entice a huge number of investors in a short period of time.

The early investors who had received the promised 150% return, however, not only reinvested the money, but also involved their family members and friends. Consequently, they ended up in sustaining great damage.

Biz & Persons, Inc. had 88 branches and offices nationwide, and employed a pyramid operation system. Each branch or local office sent to the headquarters a rebate amounting to 9-10% of the monthly investment made therein. Then, the headquarters collected one third of the monthly rebate and sent back the rest to the branch or local office as bonus.

▽Damage and countermeasure= The company currently has a balance of 2.2 billion won, a small fraction of the money it has cheated from its investors. Thus, the prosecution focuses on finding out the hidden assets of the owner and major executives. In addition, to facilitate collection of investments by victims, the division will actively employ the Damages Order system. Under the system, a victim, without commencing a separate civil action, can collect on their investments by prosecutor`s confirmation of the cheated amount. When the confirmation is made, the victim can get the court order entitling each victim to collection of the money fleeced.

Sang-Rok Lee myzodan@donga.com