Man sentenced to 20 months for illegal lending scheme charging over 10,000% annual interest

A Busan court sentenced a man in his 30s to one year and eight months in prison Saturday for running an unregistered illegal lending operation, the court announced.

The defendant, identified only as A, was indicted on charges of violating the Act on Registration of Loan Business and Protection of Finance Users. He lent a total of 131.72 million won ($88,500) across 464 transactions between January last year and February this year without registering as a lender.

A posed as a gift voucher buyer, posting notices in online gift voucher trading forums saying he was purchasing vouchers. When people contacted him, he had them sign a "simplified pre-sale contract for gift vouchers," then handed over cash under the guise of payment for the vouchers. Borrowers were then required to deposit the principal plus interest into a virtual account.

He typically lent 200,000 to 500,000 won and collected repayment within two days, charging 100,000 to 200,000 won in interest — an annualized rate exceeding 10,000 percent.

When some borrowers failed to repay, A filed police complaints against them to pressure them into settling their debts.

Judge Mok Myeong-gyun of Busan District Court's Criminal Division 17 said A "never actually held any gift vouchers" and described the scheme as "a meticulous and cunning crime that exploited the form of gift voucher transactions." The judge added that severe punishment was warranted because the defendant "preyed on the most vulnerable members of society through high-interest illegal lending."