Man in his 60s runs massive Ponzi scam while on probation for past fraud

Key Takeaways

A South Korean man ran a $60 million Ponzi scheme targeting over 2,200 investors under the guise of AI and crypto businesses.
The scam promised 300% returns and mainly affected victims aged 50-70, many of whom were unfamiliar with crypto technologies.

South Korean police arrested a man in his 60s for orchestrating a $60 million Ponzi scheme while on probation for a previous fraud conviction, according to a Friday report from the Yonhap News Agency.

The suspect, identified as Mr. A, and six accomplices allegedly defrauded investors between October 2020 and January 2022. The group held promotional events in Gangnam, Seoul, claiming they ran businesses in artificial intelligence (AI) and crypto.

Promising returns of 300 percent, the group attracted more than 2,200 investors, with individual contributions ranging from approximately $770 to $770,000. The operation followed a typical Ponzi scheme model, using funds from new investors to pay returns to earlier participants until the scheme eventually collapsed.

Mr. A recruited family members and acquaintances to handle various aspects of the operation, including finance, IT, marketing, and investor recruitment. Police began investigating in September 2022 after receiving complaints, leading to a two-month manhunt when the suspect disappeared before his pretrial hearing.

The arrest revealed that Mr. A had been serving a two-year suspended sentence from July 2021 for a similar fraud scheme when he launched this new operation.

“Ponzi schemes are crimes that deserve stronger punishment, as they result in many victims and make it impossible to recover losses,” a police spokesperson said, noting that many victims were aged 50-70 and unfamiliar with AI or crypto technologies.