Original Coverage & Source Attribution: en.sedaily.com
SEONGNAM — A suspect accused of running a real estate YouTube channel and an auction academy while taking large sums of investment money from the suspect’s students has been referred to prosecutors.
Bundang Police Station said on the 3rd that it had detained the suspect and referred the case to prosecutors on charges of fraud and illegal fundraising.
Police said the suspect is accused of taking about 12.5 billion won (approximately $8.6 million) from 126 victims between January 2019 and July this year.
Police found that the suspect solicited money by telling investors that if they put money into a fund he operated, he would generate returns through real estate auctions and pay back their principal along with a fixed return.
After receiving the first complaint on Aug. 23 this year, police designated Bundang Police Station as the lead investigative unit. Investigators then merged a total of 100 damage cases into a single investigation.
The investigation team secured evidence through search and seizure operations and focused on tracing the flow of the victims’ funds.
The investigation found that the suspect had appeared on television programs in the past and was known as a real estate investment expert. Police believe he raised funds by exploiting relationships of trust with students and investors who had taken his classes.
Police concluded that the suspect carried out what is known as a Ponzi scheme, paying returns to existing investors with money from new investors, without any concrete investment plan or means of generating stable profits.
The investigation found that the suspect received funds in the range of 40 billion won over about seven years. A significant portion of that was paid out to existing investors in a rotating repayment scheme, and some was used for personal consumption and other private purposes.
Police also confirmed indications that the suspect diverted funds in the range of billions of won and used money to buy a building under a corporate name. Police have accordingly applied for a preservation order for the collection of about 8.2 billion won in criminal proceeds.
A police official said legal guarantees of principal are limited to products such as deposits and installment savings at regulated financial institutions. “If an investment product promises to guarantee principal, you should suspect illegal fundraising,” the official said.
The official also stressed that investors should be especially careful, noting that high returns come with correspondingly high risks.
