Police have broken up a Korean criminal ring based in Pattaya, Thailand, that posed as public institutions and swindled about 600 million won ($430,000) from small suppliers in South Korea by asking them to buy goods on its behalf. The group also secured the bank accounts used in the scheme by approaching users of gambling websites with offers to compensate their losses, investigators said.
The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency's Metropolitan Investigation Bureau said on Sept. 16 that it had arrested 10 Korean members of the ring on charges including joining and taking part in a criminal organization, fraud and violating the Electronic Financial Transactions Act. Eight of them have been detained, and the police secured a pre-indictment forfeiture order on about 57 million won in criminal proceeds.
The suspects are accused of taking about 600 million won from 22 equipment and supply operators between Feb. 24 and April 8 this year by impersonating the Korea Institute of Nuclear Nonproliferation and Control as well as universities, education offices, prisons and city halls. The members are aged 21 to 36 and all Korean, and police are tracking a Korean ringleader in his 50s who was not caught at the scene.
The scheme ran in two stages: recruiting bank accounts and running the fake-order scam. The ring first told users of illegal gambling sites that it would compensate their gambling losses through a guarantee insurer, persuading them to open new accounts and then handing over the account numbers and passwords.
The members then posed as employees of public institutions and contacted small equipment and supply firms, saying they wanted to order goods worth several million to several tens of millions of won. With the firms expecting a contract, the callers said they urgently needed items for a fire safety inspection and asked them to buy products the firms did not carry, such as fire blankets and extinguishers, from a designated vendor. The designated vendor was a fake company created by the ring, and the payments went into the accounts it had obtained earlier.
The ring set up a call center and lodgings on the first to third floors of a large resort in Pattaya. It paid 3 million won for each bank account recruited and 10% of the proceeds of each successful no-show fraud, and kept tight control over members by holding their passports and mobile phones separately. It also split them into teams of three, assigned each team to a different floor and restricted contact between teams to spread the risk of being caught.
Police obtained a tip on March 30 that Koreans were running a no-show fraud operation at a particular resort in Pattaya and began working with Thai police. About a month later, on April 27, Korean and Thai police carried out a joint raid and arrested nine members on the ground. The suspects were then repatriated to South Korea in stages, and police identified and arrested one more member who had recruited members inside the country.
Police plan to keep pursuing the ringleader and other remaining members who evaded the raid, working with investigative agencies in Thailand and other countries. Lee Kye-hyung, head of the Seoul Metropolitan Police Agency's second phishing fraud investigation section, urged particular caution, saying no-show fraud in which callers pose as public institutions or universities and ask firms to buy goods from another vendor on their behalf is rising sharply.
