Prosecution to launch fresh probe into pyramid scandal

The prosecution said Monday that it will launch a fresh investigation into South Korea’s largest-ever fraud case as a close aide of Cho Hee-pal, a notorious swindler, was arrested in China three days ago.

Kang Tae-yong, Cho’s No. 2 man in the pyramid scheme, was caught by the Chinese police at his apartment in Jiangsu Province on Saturday, seven years after he fled to China to avoid the police probe.

“We expect Kang, who is a key suspect, to give us decisive clues in investigating the fraud case,” an official from the Daegu District Prosecutor’s Office said.

Kang is known to be the right-hand man of Cho, the mastermind behind the pyramid scheme who allegedly died of a heart attack in China. 

Kang took charge of finances and lobbying prosecutors, police officers and political tycoons, asking them for leniency in the probe. He is also suspected of embezzling tens of billions of won in company assets.

Kang fled to China, along with Cho, in 2008 as the police began investigating the company’s fraud scheme. The International Criminal Police Organization issued red notices for both of them, marking them among the internationally most-wanted.

Cho allegedly conned up to 50,000 people out of an estimated 4 trillion won ($3.5 billion) by running 10 leasing companies to lure potential investors with false promises of high returns on their capital. Korean victims claim the total damages amount to 8 trillion won.

The fraud case, which has dragged on after the key suspects escaped to China and Cho was reported as dead, will likely gather momentum as Kang is expected to be extradited to Korea as early as this weekend.

With Kang’s return, prosecutors plan to look into whether Cho died as reported, possible bribery involved in the scam, and alleged embezzlement. Victims believe that Cho is still alive, living a life of luxury under a fake identity in China. 

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)