Group Referred for Pocketing 5 Billion Won in Illegal Fees Under Guise of Government-Backed Loan Consulting

Consulting fees of 10-15% of the loan amount
Also referred personal rehabilitation and bankruptcy cases
Police seek pre-indictment freeze on 430 million won

A group accused of extorting approximately 5 billion won in illegal fees from vulnerable people by promising to help them obtain government-backed loans has been referred to the Prosecution Office.

Police are entering the office of an illegal loan brokerage to conduct a search and seizure. Seoul Gwanak Police Station

The Seoul Gwanak Police Station said on the 4th that it had referred 53 people without detention, including A, the head of an illegal private lending company, and B, a director at a law office, on suspicion of violating the Act on Registration of Credit Business, etc.

A and his associates are suspected of arranging loans totaling 46.6 billion won for 3,481 economically vulnerable people who had difficulty borrowing from conventional financial institutions between March 2024 and May this year, and pocketing 4.97 billion won in illegal fees.

The investigation found that A and his associates arranged government-backed loans without registering as a loan brokerage business. They demanded “consulting fees” in return for connecting borrowers with loans. The fees amounted to 10-15% of the loan principal, meaning borrowers had to pay 1 million to 1.5 million won for a 10 million won loan.

The investigation also uncovered evidence that the group arranged debt adjustment procedures and received payment. Some members connected people with low credit ratings to two law offices for debt adjustment cases, including personal rehabilitation and bankruptcy, and received 78.75 million won in return. Police additionally booked those involved and referred them on suspicion of violating the Attorney-at-Law Act.

Modus operandi of a loan brokerage firm. Seoul Gwanak Police Station

Police launched an investigation after receiving a tip in April. They searched and seized the company’s office and financial accounts used in the alleged crimes, confirming the fee deposits and the identities of those involved. They also applied for a pre-indictment freeze on 430 million won of the alleged criminal proceeds, asking the court to prevent the disposal of assets so the proceeds can be recovered later.

A police official urged the public to “seek information about loans under public financial support programs through official institutions such as banks” and to “immediately call 112 if someone whose identity cannot be verified offers to arrange a loan and demands a fee, or if you become a victim of an illegal act.”

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