How fraud networks infiltrated credit cooperatives

On Sept. 4, 2024, prosecutors arrived at Igok Saemaul Geumgo, a community credit cooperative in Daegu's Dalseo District, with a search warrant. Investigators alleged that dozens of accounts issued by the institution had been used in crimes including voice phishing scams. Opened with borrowed identities and shell companies, the accounts were tied to a range of criminal activity. The warrant sent shockwaves through the cooperative, which has only about 10 employees.

The following day, Lee Yeong-hwan, a 52-year-old executive director who oversaw daily operations, acted discreetly. He photographed the warrant with his cellphone and immediately sent the images to a man known as "President Koo," the alleged head of a fraudulent-account distribution network. Days later, Lee met him in person and delivered a warning: "The accounts 'we' created are under investigation." Even as investigators closed in, a senior cooperative official remained in contact with the criminal network.

Over three years and eight months, Igok Saemaul Geumgo and Koo's organization produced 126 fraudulent accounts. They were used in a wide range of crimes, including illegal gambling operations. Whenever an account was frozen after a voice phishing complaint, Lee allegedly passed the complainant's contact information to Koo. Koo then pressured victims to withdraw their reports. The accounts developed a reputation for staying active even after fraud complaints were filed, and demand surged. After his arrest, Koo told prosecutors that demand for the accounts was so strong that his organization could not keep up.

The Igok case may represent a broader trend. An analysis of all 24,259 corporate accounts registered with the Financial Supervisory Service as having been used in voice phishing crimes between 2021 and 2025 found a sharp rise in accounts issued by secondary financial institutions such as Saemaul Geumgo cooperatives and local NongHyup agricultural cooperatives. Their share climbed from 19.1% in 2021 to 46.8% last year. Over the same period, the proportion issued by commercial banks and other primary financial institutions declined.

Among non-bank lenders, local NongHyup cooperatives and Saemaul Geumgo branches accounted for the vast majority of the accounts. Both operate as member-owned cooperatives with relatively limited oversight from their central federations. As commercial banks tightened account-opening requirements, including on-site inspections to confirm that businesses were actually operating, criminal networks shifted toward mutual finance institutions, where screening procedures were less stringent.

Drawing on court rulings in the Igok Saemaul Geumgo case and testimony from insiders, the Dong-A Ilbo Hero Content Team traced how the absence of effective oversight in parts of South Korea's secondary financial sector opened the door for criminal networks to operate.