Detained Loan Sharks Indicted: Charged Victims With False Accusations After 29,000% Interest Loans at Casinos

Prosecution Clears Foreign National Falsely Accused of Theft through Supplementary Investigation
Passports and Alien Registration Cards Seized, Exposing Victims to Illegal Stay
Amended Lending Business Act Enforced: All Loans Above 60% Annual In

Chinese illegal private lenders who operated usurious lending businesses targeting foreign residents at foreigner-only casinos and other locations, and who falsely reported their victims to the police for theft and fraud to conceal these activities, have been apprehended through a supplementary investigation by the prosecution.

Seoul Eastern District Prosecutors' Office. Seoul Eastern District Prosecutors' Office

The Criminal Division 2 of the Seoul Eastern District Prosecutors' Office (headed by Chief Prosecutor Lee Seunghak) announced on the 11th that Chinese nationals A (44) and B (39) have been indicted and detained on charges of false accusation and violation of the Loan Business Act. Meanwhile, Uzbek national C, who almost faced criminal punishment due to the false report, has been cleared of charges.

According to the prosecution, from June 2023 to last month, A was charged with illegally lending a total of KRW 54.2 million across 17 transactions at foreigner-only casinos and similar venues, with annual interest rates ranging from 174% to 7,300%. B was also referred to trial, accused of unlicensed lending in 39 cases between July 2022 and last month, providing a total of KRW 143 million at annual interest rates ranging from 100% to 29,200%, and collecting illegal interest.

This case began in November of last year, when A and B reported victim C to the police for theft. They claimed that C had "temporarily taken a mobile phone that had been offered as collateral, saying he would use it briefly, but did not return it and stole it." Upon receiving the case, the prosecution launched a supplementary investigation, noting that C's repeated pattern of selling and then allegedly stealing his own mobile phone at the casino deviated from typical criminal behavior.

The prosecution's investigation revealed that A and B had lent gambling funds to C at extremely high annual interest rates of 5,069% and 3,476%, respectively, taking his mobile phone as collateral. They attempted to conceal the fact that these were anti-social loan contracts, all of which are invalid because the annual interest rate exceeded 60%. In order to recover the money, they falsely reported C for theft.

The prosecution determined that, under the amended Loan Business Act effective since July 22 of last year, the false reports constituted false accusations. According to the revised law, any loan contract with an annual interest rate exceeding 60% is entirely void, including both principal and interest agreements. As a result, even funds already paid can be reclaimed. For illegal private lenders, since any interest agreement is itself invalid, merely receiving interest is grounds for criminal punishment.

During the investigation, the prosecution identified numerous foreign victims from countries including China, Taiwan, and Mongolia, in addition to C. A and others specifically targeted foreign residents in Korea, who are often vulnerable to asserting their rights or seeking relief, by operating in hard-to-regulate locations such as foreigner-only casinos and online platforms. They also took not only vehicles and mobile phones, but even passports and alien registration cards as collateral, exposing victims to the risk of becoming undocumented.

A prosecution official stated, "We plan to actively apply criminal provisions such as false accusation charges to cases where individuals file false reports or complaints based on anti-social loan contracts that are void under the Loan Business Act, or abuse investigative agencies as a means of debt collection."

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