[Exclusive] "Determined to Get in Shape"... 20s Owner Sold Memberships Until Closure, Embezzling Billions of Won

Allegations of Continued Business Despite Refund Delays

Eight Instructors Claim Unpaid Wages as Investigation Begins

The police have launched an investigation into the owner of a Pilates center who, despite facing financial difficulties, sold discounted memberships until just before closing the business and embezzled course fees totaling several hundred million won.

On the 12th of last month, a notice regarding business suspension written by an instructor was posted on the entrance door of a Pilates center in Yongsan-gu, Seoul. Members of the center filed a fraud complaint against the CEO, claiming they did not receive refunds for their course fees. Photo provided by a reader

The Yongsan Police Station in Seoul announced on the 11th that Lee, a 28-year-old representative of the center, has been booked without detention on charges of fraud.

According to the police, Lee is suspected of abruptly ceasing business operations after collecting prepaid course fees amounting to several hundred million won from members in early May. The investigation has expanded after 78 members of the center filed a complaint against Lee on May 26, and additional complaints are currently being processed.

The victims claim in their complaint that Lee encouraged membership sign-ups and advance payments, despite knowing that the business could not be operated normally due to financial distress, thereby escalating the damages. The victims stated, “Lee continued to recruit new members and hold discount promotions until about one week before the business was suspended. Afterward, he sent text messages to members unilaterally notifying them of the suspension due to financial difficulties.”

Member A said, “After the center’s operations were suspended, I requested a refund, but the owner delayed the refund with excuses such as bank transfer delays. In the end, I was unable to get my money back, and all contact with the owner was lost.” Another victim, member B, said, “Even right up to the suspension of business, discount events for memberships continued, so I thought the center was operating normally, which led many people to newly register or make additional payments.”

In particular, it is reported that Lee continued long-term membership discount promotions for existing members, even while experiencing financial difficulties and delays in refunding current members. According to the victims, Lee encouraged additional sign-ups by offering longer-term memberships at lower prices than previous ones and continued to recruit new members until just before suspending business operations.

Some members have applied for chargeback rights with their credit card companies and are proceeding with the payment cancellation process, but a significant number of members who paid in cash reportedly still have not received refunds. The number of participants in the group chat room formed by victimized members has now increased to about 130 people.

Meanwhile, instructors are also claiming wage arrears. Eight instructors from the center have not received their wages for several months and are preparing legal action. The unpaid wages claimed by the instructors amount to approximately 18 million won.

Instructor C said, “I have not received nearly 4 million won in wages. Instructors are in a legal blind spot because it is difficult to be recognized as employees under labor law.” Most of the center’s instructors reportedly worked under freelance contracts that apply a 3.3% business income tax rate.

A police official stated, “We are currently verifying the exact facts based on the complainants' statements, the suspect’s questioning, and the submitted materials.”

This content was produced with the assistance of AI translation services.