Following a disappearance-fraud case worth 10 billion won at a gold shop building in Jongno-gu, Seoul, a total of three business owners in the same building have vanished one after another. Police estimate there is a strong possibility that gold shop operators who had prepurchased gold on credit disappeared successively after failing to withstand financial pressure amid the recent downward trend in gold prices.
According to police on the 15th, the Pyeongtaek Police Station in Gyeonggi Province detained a woman in her 40s, identified as A, who operated a gold shop in Jongno-gu, Seoul, on the 9th of this month and referred her to the prosecution. The case was first filed with the Jongno Police Station in Seoul in early April this year, but because the business had closed, it was transferred to the Pyeongtaek Police Station, which has jurisdiction over A's residence. The damage amount identified by police is 187.6 million won, and related complaints have reached eight so far.
A is suspected of receiving orders for silver bars and precious metals, as well as requests to make wedding gifts, from customers, then taking the money and goods without delivering the promised items. According to a complaint obtained by The Seoul Economic Daily, one victim ordered 28 silver bars from A between December last year and January this year, handing over cash and gold items worth a total of 101.9 million won, but did not receive 23 of them.
Victims believe there is a high possibility that A continued transactions through a so-called "robbing Peter to pay Paul" method, using funds from new deals to fulfill existing contracts. Baek Seo-jun, representative attorney at O&N Law Office and legal representative for the victims, said, "It appears she gained trust by actually delivering goods in the early transactions, then induced additional orders," adding, "It is a typical fraud method that stimulated investment sentiment by taking advantage of a period when gold and silver prices were surging."
A notable aspect of this case is that the business of B, previously suspected of embezzling more than 10 billion won in gold and mutual-savings funds, operated in the same building as A. So far, about 140 complaints have been filed related to B's business, and the amount of alleged damage identified by police exceeds 10 billion won. Police transferred the case to the Financial Crime Investigation Unit of the Metropolitan Investigation Division at the Seoul Metropolitan Police Agency and continued the investigation, arresting B on the 10th of this month, after which a detention warrant was issued. In addition, C, who was detained on fraud charges in February this year after disappearing with gold bars worth about 2.8 billion won, also reportedly operated a gold shop in the same commercial building as A and B.
Although these business owners have been detained, victims are anxious because they are likely unable to recover a significant portion of the damages. Generally, in gold shop fraud cases, the suspect has often used up or hidden all the stolen money, making recovery of losses difficult. A victim in his 50s who filed a complaint against one of the owners, claiming total damages of about 700 million won, said, "For the 38 days until the owner was caught, I felt like my blood was drying up," and sighed, "Even though she has been detained, there is no guarantee of recovering the losses."
According to victims' accounts, these businesses recruited customers by advertising that "there is a special-priced quantity available on a first-come, first-served basis" and that it was "a transaction method possible only through the association," and also used a method of paying a certain rental fee on the gold entrusted to them. An official at the commercial building said, "Some nearby gold shop merchants also lent precious metals to these owners and did not get them back," adding, "It is frustrating that such incidents keep happening in the same building."
The Seoul Economic Daily's reporting found that victims have been responding on their own, including personally tracking down the owners' whereabouts. In this process, some victims who visited an owner's home suffered hardships, such as being reported for trespassing. More than 40 victims have so far joined a petition on the government's Shinmungo online complaint system calling for a thorough investigation.
A bigger problem is that such gold shop fraud cases could increase due to the recent decline in gold prices. In fact, gold prices, which recorded double-digit growth rates over the past three years, reached a record high of $5,594 per troy ounce in January this year, then fell to around $4,000 as of that day, down about 30% from the start of the year. Some gold shops that had increased transactions during the gold price rally fell into financial difficulties after the price drop, unable to secure the cash they had to return to customers, and some chose to disappear. Kim Sang-kyun, a professor in the Department of Police Science at Baekseok University and former president of the Korean Association of Criminal Psychology, said, "It is worth noting that the point at which the record-high gold price turned downward early this year overlaps with the disappearance incidents," explaining, "There is a possibility that owners who could not withstand financial pressure due to the gold price decline chose to disappear."
