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Photo = Mirae Asset Life Insurance |
[Alpha Biz= Kim Jisun] 97 insurance agents from Mirae Asset Life’s subsidiaries, Mirae Asset Financial Services and PS Fine Services, have been caught in a Ponzi scheme (a multi-level financial scam) totaling 1.4 trillion KRW.
These agents targeted 765 insurance policyholders, mostly young professionals, collecting 1,406 billion KRW in fraudulent funds and failing to repay 342 billion KRW.
The Financial Supervisory Service (FSS) revealed this information on Sunday after conducting an emergency on-site inspection of two corporate insurance agencies (GAs) allegedly involved in illegal fund solicitation between December of last year and February this year.
According to the FSS, PS Financial CEO Lee, an insurance agent by background, founded PS Fine Services in January 2022 with an investment of 230 billion KRW. The organization was structured as a four-tier pyramid scheme for illegal fund solicitation.
PS Fine Services agents, numbering 67, raised 1.113 trillion KRW from 415 people, failing to repay 294 billion KRW. Meanwhile, 30 agents from Mirae Asset Financial Services raised 293 billion KRW from 350 people, but failed to repay 48 billion KRW.
The agents used social media ads to approach young professionals, promoting services such as salary management studies and financial consulting. They then encouraged customers to invest in short-term bonds or loan products from PS Financial, promising high returns.
In reality, the contracts were money loan agreements, and investment funds were deposited directly into CEO Lee's personal account. The agents earned up to 3% of customer investments as commissions, while senior managers received 0.2-1% of the funds raised.
The top-performing agent at PS Fine Services raised around 360 billion KRW and received 11 billion KRW in commission for fraudulent solicitations. In addition, bonuses and promotional travel rewards were offered to agents to encourage insurance sales.
Starting in the second half of last year, as PS Financial faced a cash shortage, Lee and others designed a high-interest product called the "Asset Growth Savings Account" with an annual interest rate of 50%, which was sold through the GA insurance agents.
As the financial pressure continued, the GAs actively supported loan companies by illegally transferring insurance commission fees to maintain the Ponzi scheme, further contributing to the fraudulent activities.
The FSS noted that the agents were attracted by the promise of excessive returns and failed to question the legitimacy of the investment products, despite the lack of transparency and the use of personal accounts for transactions. The agents used customer information gathered during insurance sales to actively solicit funds from existing insurance clients.
The FSS criticized PS Fine Services for not appointing a compliance officer and Mirae Asset Financial Services for insufficient regulation of social media advertising.
It is estimated that 371 individuals were involved in the PS Financial Ponzi scheme, with 134 of them being insurance agents. Despite the scandal, these agents continue to work at 28 different GAs, selling insurance products.
The FSS plans to take strict action against the insurance agents and other involved parties, including canceling registrations, imposing personal sanctions, and issuing fines. It will also report the violations to the authorities for further investigation.
The FSS plans to impose severe disciplinary actions on PS Fine Services executives and agents and file criminal charges for embezzlement related to the misuse of corporate funds by PS Fine Services’ CEO. Additionally, the FSS intends to improve regulations by adding fraudulent activities as grounds for the cancellation of GA and agent registrations and will create guidelines for insurance companies to better oversee GAs connected to loan agencies.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
