A large-scale Ponzi scheme is rampant... What are the damage response measures?

Recently, large-scale fraud has been rampant, recruiting investors with the lure of high profits and stealing their investment funds. In fact, according to the interim results of the special crackdown on investment fraud announced by the police in February of this year, a total of 7,232 cases were detected during the 17-month crackdown period, and 3,300 people were arrested. In particular, the total amount of damage received during the period was calculated to be around 894.9 billion won.

Especially these days, the damage is becoming more severe due to the so-called ‘Ponzi scheme’, which has become more multi-level. They operate an illegal multi-level organization and plan systematic fraud. After gaining the trust of victims over a long period of time, they involve not only the victims, but also the victims' families and acquaintances, causing not only financial losses but also psychological damage.

To explain the Ponzi scheme in more detail, let's look at the case I am currently working on. Uplus KMA (hereinafter referred to as UK Platform), headquartered in Changwon-si, Gyeongsangnam-do, operates an asset management service business, including medical services, with more than thousands of members across the country. The company urged its members to invest, guaranteeing monthly returns of 5-10%.

In addition, the company has been providing points that can be used on the platform when it receives investment funds from members. Members use these points to receive services such as receiving treatment at affiliated hospitals or taking cruises through travel agencies. From the members’ perspective, there was no reason not to participate. Additionally, if you invite family or acquaintances, you can earn more points, so additional rewards are guaranteed.

However, the situation took a turn recently when the CEO of the UK platform was arrested on charges of fraud. It was revealed that the company had been using the money of new investors to divert profits that were supposed to be paid out to existing investors. The UK platform not only stopped paying profits but also stopped providing various services that members had used. In the end, the damage grew out of control, and the corporation I work for is gathering victims and preparing a class action lawsuit.

Quick response is key to Ponzi fraud cases such as the UK platform. First, if the scale of fraud damage is large, a class action lawsuit can be considered. In order to proceed with a class action lawsuit, you must first recruit victims, and since joint lawsuits usually benefit from groups of 10 or more, the key is to gather as many victims as possible.

Class action procedures are largely divided into criminal and civil. First, victims, along with their legal representative, clearly outline the details of the incident and the extent of the damage and submit a complaint through the local police station. Criminal litigation can be said to be the first step to maximizing the criminal punishment of the perpetrator and gaining an advantageous position from the victim's perspective. In addition, a civil lawsuit must also be filed to recover damages. This is because criminal judgments can be used as powerful evidence in civil lawsuits. If civil liability for damages is recognized and a judgment for compensation for damages is made, compulsory execution through seizure, etc. of the perpetrator's assets becomes possible.

Daeryun Ko Jeong-hang, a criminal lawyer at the Daeryun Law Firm, said, "A class action lawsuit usually takes six months to a year to complete just the criminal procedure. If a civil lawsuit is added, it may take even longer, so thorough preparation is necessary in advance." He added, "Therefore, if you are planning a class action lawsuit, we recommend that you appoint a legal representative with extensive experience in representing related cases. Professionals who are well-versed and experienced in group criminal complaints, civil preservative dispositions and litigation, etc. “Only by proceeding with the case with a qualified law firm or lawyer can the loss be recovered as quickly as possible and the damage that has already occurred can be minimized, and the perpetrators who have committed a mistake that has completely destroyed the lives of the victims must be severely punished,” he said.

Reporter Jin Ga-young (lawissue) (news@lawissue.co.kr)

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Large-scale Ponzi scam in full swing... What are the damage response measures? (Shortcut)