Police probe fraud scheme that lured victims into vehicle leases with promise of government funds

Police have launched an investigation after a string of fraud complaints emerged from people who say they suffered financial losses after being talked into vehicle lease contracts with promises of government policy funding.

Incheon's Michuhol Police Station recently received fraud complaints in connection with the scheme and has opened an investigation, according to Yonhap. When cases filed at other police stations are included, the number of complainants reporting the same type of harm reaches more than 40.

According to the complainants, a suspect identified only as A told them they could receive government policy funds if they set up a sole-proprietor agricultural corporation and signed a vehicle lease contract. Because the lease was presented as a procedural step for obtaining the funds — not for actually using a vehicle — the complainants never took delivery of the cars.

The scheme appears to have exploited the fact that a vehicle lease is in effect a loan secured against the vehicle. Once a lease contract is signed, the leasing company pays the full purchase price to the dealer, and the lessee repays that amount in monthly installments over several years. If the lessee never takes delivery of the vehicle, the car and the money it represents remain under the control of whoever arranged the contract, leaving the person whose name is on the lease with nothing but debt.

The central problem was the lease payments. A had promised to cover the monthly installments but made only partial payments before stopping, the complainants say, leaving them each on the hook for lease fees worth millions of won every month. The total losses claimed by the complainants are said to run into the tens of billions of won.

Police plan to consolidate the cases filed at different stations, verify the complaints, and then investigate A and those connected to the suspect.

"Multiple complaints have been received and an investigation is under way," a police official said. "We cannot disclose specific details."