[Rose-tinted 'Debt' Investing]②The Trap of "Principal Guarantee"... The Rise of Ruthless Leading Room Scams

Cumulative Losses from Leading Group Scams Approach 2 Trillion Won Over Past 3 Years

Fake Profits Used to Lure Victims into Large Investments

Multi-Level Scams: Disguised as Feng Shui, Fortune-Telling, or Victim Support

#An office worker in his 40s, identified as Mr. A, joined a Telegram chat room at the end of last year after watching a "free stock tip for soaring stocks" video on YouTube. He hesitated to invest, but a series of profit certifications posted in the chat started to sway him. One day, the chat room operator said, "I own shares in a company about to go public and will give you a chance to buy in at a low price." Tempted by the offer that it was first-come, first-served, Mr. A sent 50 million won. On the much-anticipated listing day, the chat room disappeared without a trace, and the operator vanished. It was a scam involving the lure of an initial public offering (IPO) of unlisted stocks.

#Mr. B, a man in his 20s who lost more than 40 million won to an investment scam, desperately sought out a victims' support group. 'Kim Dogyu,' who approached him claiming to offer free legal advice through the platform, seemed like a ray of hope. Introducing himself as a lawyer from a collection agency, Kim Dogyu told Mr. B that he had even taken out a loan from a lender in an attempt to help, instilling a sense of guilt in the victim. Over 40 separate transactions, Kim extorted a total of 47 million won. The collection agency he was supposedly associated with was also a bogus entity—in reality, Kim was playing both the victim and collection agent alone. Mr. B expressed his outrage, saying, "He cruelly exploited the victims' desperation."

Investment leading room scams that promise principal protection and high returns are becoming ever more sophisticated. Not only are large sums being stolen through fraudulent investments, but these scams are increasingly spreading as "nth-round scams," where criminals extract more money by offering to recover previous losses. Over the past three years, investment crimes exploiting desperate investors have resulted in losses nearing 2 trillion won.

According to the National Police Agency on August 6, losses from illegal investment leading room scams were tallied at 126.6 billion won (1,452 cases) from September to December 2023—the first year data was compiled—and 710.4 billion won (8,104 cases) in 2024, followed by 658.1 billion won (6,853 cases) last year, and 336.6 billion won (3,506 cases) in the first half of this year. During this period, total losses amounted to 1.8317 trillion won, with 19,915 cases reported. Breaking the annual losses down by month, this equates to an average of around 5.4 billion won lost per month.

Investment leading room scams typically involve impersonators posing as asset investment experts who promise principal protection and high returns, only to run off with the investment funds. Victims are often instructed to download fake securities company applications, after which manipulated fake home trading system (HTS) screens are used to trick them into believing they are making huge profits, prompting further investment. When victims request withdrawals, scammers demand additional deposits for "taxes," "fees," or "security deposits"—a trademark tactic.

For instance, the Financial Crime Investigation Division of the Seoul Metropolitan Police Agency recently arrested nine members of a criminal organization on charges including gang membership and fraud. The group was based in Sihanoukville, Cambodia, and defrauded Koreans of about 10 billion won through a stock investment scam. They lured victims to a chat group on Naver Band by posting "consultation URL addresses" in the comments section of YouTube channels run by actual stock experts, and then pretended to be secretaries from domestic securities companies to further deceive them.

"Your fortune says you should invest in stocks": Smarter leading room scams

Kim Miae, Head of the Financial Crime Investigation Division, is briefing on the 'Arrest of a gang involved in unlisted stock investment leading room fraud' at the Seoul Metropolitan Police Agency's Wide Area Investigation Unit, Mapo Complex, Mapo District, Seoul. Photo by Jo Yongjun

Recently, these investment leading room scam syndicates have grown even more cunning in the ways they lure victims. New and hybrid scam tactics have emerged, and illegal loan sharks and organized crime groups are sometimes involved, making the damage worse.

The Financial Supervisory Service and the Yeongdeungpo Police Station in Seoul this year identified a new method where scammers approach users on social media with familiar content such as feng shui or fortune-telling, then induce them to install fake stock trading apps. In response, a consumer alert was issued at the "caution" level. Initially, scammers offer feng shui or fortune-telling information in group chat rooms to gain psychological trust before prompting victims to download a fake app called "PIPS Assets" and encouraging them to invest.

But the problem does not end there. Victims of investment leading room scams often become targets for second and third rounds of fraud by scammers impersonating government recovery agencies, law firms, or collection agencies. They extract more money under the pretext of fees, or tell the victim that account tracing is needed for "recovery" and demand bank accounts and one-time passwords (OTPs), which are then used as shell accounts in new crimes. The victimization grows and now includes potential criminal liability for the victim.

In fact, a 30-something office worker, identified as Mr. C, lost 40 million won after being deceived in consecutive scams under the pretense of recovering previous losses and unfreezing seized funds—only to end up being charged as a suspect. The financial information provided to the collection agency was used for further crimes. He said, "I had to travel back and forth between Incheon and Siheung for four police investigations, and eventually ended up a suspect. The pressure and debt were so overwhelming that I even considered giving up on life."

"We'll recover your money": How 'nth-round scams' double the pain

The reason these "nth-round scams" are even possible in the first place is the existence of highly organized criminal structures. A veteran police officer from the Seoul area with years of experience investigating investment scams explained, "Most of the time, the primary and secondary scam rings are under the same control. Victims' personal information is traded, and those who fall for the manipulation often become involved in other crimes, such as money laundering, creating a vicious cycle of secondary and tertiary victimization."

Experts say that following the COVID-19 pandemic, remote communication has become the norm, making the online space a primary venue for investment scam groups. Taking advantage of the difficulty of verifying identities online, several members of a fraud syndicate can pretend to be regular participants, eroding victims' caution and trust.

Kwak Daekyung, professor of police administration at Dongguk University, pointed out, "Because leading room scams are usually carried out by organizations, ordinary people can easily fall for them and are not well equipped to deal with them alone. While some people may be searching for information out of their own volition, unsolicited investment offers arriving through the internet or YouTube are likely to be scams."

Professor Kwak also emphasized, "People have become accustomed to forming relationships and making financial transactions remotely, but in cyberspace it's really hard to know who you're dealing with. You should study the methods of scams in advance, but if you fall victim, the most practical way to prevent further damage is to first consult with the police or family."

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