Guaranteed 200.2 Billion Won Without Capital or License... Prosecutors Indict Group for Pocketing 3 Billion Won Through "Worthless Insurance Certificates"

87 Unlicensed Insurance Policies Issued Over Eight Years
Accused of Enabling Transfer of Land Worth 142.7 Billion Won Without Final Payment
Prosecutors Seek to Shut Down Website and Dissolve Corporation

A group that issued insurance certificates worth about 200 billion won and collected approximately 3 billion won in fees, while posing as a legitimate surety insurance company despite lacking the capital or ability to pay claims, has been brought to trial.

On the 9th, the flag of South Korea and the prosecutor's office flag fluttered in the wind in front of the Seoul Central District Prosecutors' Office building, as Gwak Joonggeun, former Special Warfare Command commander, was reportedly summoned and under investigation by the Special Investigation Headquarters for Emergency Martial Law of the prosecution. Photo by Huh Younghan

On the 6th, Seoul Central District Prosecutors’ Office Criminal Division 9 (Chief Prosecutor Koh Eunbyeol) announced, "On the previous day, we indicted six people—including former and current CEOs and employees of unlicensed surety insurance company K Corporation—as well as the corporation itself, on charges of violating the Insurance Business Act and fraud and embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes." Three of those, including former and current CEOs, were indicted and taken into custody.

According to the prosecution, between February 2019 and June of this year, the group is accused of issuing a total of 87 insurance certificates worth 200.2 billion won in the name of K Corporation, taking fees from construction companies and others, all without approval from the Financial Services Commission.

Despite having neither the capital nor the intention to pay out claims in the event of an incident, the group allegedly continued business by registering false information as if they had 10 billion won in capital and by repeatedly changing the CEO.

They are also accused of splitting about 3 billion won that they had received as guarantee fees among themselves. Prosecutors found that although K Corporation had previously been penalized seven times for similar crimes, the company continued its illegal activities, believing that the benefit of earning 1–3% of the guarantee amount as commission outweighed the risk of punishment.

During their account-tracking investigation, prosecutors confirmed that K Corporation had issued a land balance payment surety certificate worth approximately 141.3 billion won to a mid-sized construction company and received 1.75 billion won. Trusting this certificate, a contractor transferred land ownership worth approximately 142.7 billion won to the construction company without receiving the outstanding payment. The defendants immediately siphoned off and divided the guarantee fee among themselves, according to the investigation.

In addition, K Corporation guaranteed a variety of debts typically assumed by contracting companies, such as restoration expenses for mountain and farmland, road paving work, lease fees for public property, and taxes. However, since it lacked the actual ability to fulfill these guarantees, whenever a claim occurred, losses were borne by local governments and public institutions.

This case was initially split among several unlicensed insurance business cases forwarded by the police. Some executives had already been punished for similar offenses, making it difficult to indict them again under the Insurance Business Act. After consolidating the cases, prosecutors determined that this was not merely unlicensed business activity, but rather a case of organized financial fraud from the start, where the group deceived counterparties without any intention or ability to pay claims. They accordingly launched a thorough supplementary investigation.

After expanding the investigation to 22 additional individuals and harmed local governments, and through further seizures, account tracing, and telecommunications investigations, prosecutors uncovered 82 additional cases of unlicensed insurance certificate issuance worth 198.6 billion won that had not been previously referred, as well as 40 counts of fraud against local governments and public institutions with damages of 171.9 billion won. It was found that three local governments, despite having won civil lawsuits, had been unable to recover guarantee bonds worth about 1.4 billion won due to K Corporation's insolvency.

Prosecutors have requested a court order to dissolve K Corporation, shut down the company’s website—as it was used solely to facilitate criminal activities rather than legitimate business—and stated, "We will respond resolutely to intelligent crimes that disrupt financial order and undermine public trust in citizens' property and the public at large."

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