You may need a consultation if
- You introduced acquaintances to an investment platform and received commissions, and now you are told you are an accomplice in unauthorized fundraising
- You invested in a crypto mining product and withdrawals are blocked
- You worked as a ranked member of an MLM company that turned out to be unregistered
- You only recommended investments based on the company's presentation materials
- You are preparing a criminal complaint to get your investment back
Relevant Laws
Act on the Regulation of Unauthorized Fundraising (유사수신행위의 규제에 관한 법률) Articles 2, 3 and 6
Prohibits, among other things, raising funds (including virtual assets) from unspecified members of the public as a business without authorization, permission, registration or reporting under the law, while promising to pay the principal or more in the future. Violations are punished by up to 5 years' imprisonment or a fine of up to KRW 50 million. Advertising for this purpose is punished by up to 2 years' imprisonment or a fine of up to KRW 20 million.
Act on Door-to-Door Sales, etc. (방문판매 등에 관한 법률) Article 24 and Article 58(1)
Operating a multi-level sales organization without registration, effectively moving only money without any trade in goods, or paying for recruiting downline salespeople itself, among other acts, is punished by up to 7 years' imprisonment or a fine of up to KRW 200 million. If three times the total sales amount exceeds KRW 200 million, the fine can be up to that amount.
Criminal Act (형법) Article 347 (Fraud)
If investment money was taken while hiding a structure that could not pay the promised returns, fraud is also at issue, and if the gain is KRW 500 million or more, the Specific Economic Crimes Act applies.
Statutes are summarized. The official Korean text is available at the Korea Law Information Center (law.go.kr).
Unauthorized fundraising and fraud are considered separately
Unauthorized fundraising is committed if you made a business of raising money while promising to repay the principal without authorization, regardless of whether anyone was deceived. The mere fact that there was a business genuinely trying to make a profit is hard to use as a defense.
Fraud additionally asks whether the structure could never pay the promised returns from the start and this was hidden. If it was a scheme paying earlier investors with money from later ones, it is easily seen as fraud, and the losses are often large enough for the Specific Economic Crimes Act to apply.
For recruiters and ranked members, what they knew is the issue
People who trusted the head office's explanation and recommended it to acquaintances are also booked. Many invested themselves and suffered losses while also receiving recruitment commissions, so it is common to be both a victim and a suspect.
The first step is to organize when you learned about the company's revenue structure, what you said when recommending it and how much commission you received. You also need to organize how much you put in and lost to explain your actual gain. Keep records of rank promotion bonuses and referral performance as well.
If you are a victim, stop making further deposits first
If you are asked to deposit more or pay a fee to withdraw, don't put in any more. Download the investment contract, deposit records, group chats and presentation materials, and consider a provisional attachment (가압류) while the operator still has assets, to give yourself a chance of recovery.
In cases with many victims, people often file complaints together. Even if you gather materials in a group chat, keep your own investment records and how you were recruited separate so that statements don't get mixed up. On the victims' side, Jisan Law writes complaints tailored to each person's investment records and goes with them to their questioning as complainants.
Factors That Affect the Outcome and Sentence
Factors that work against you
- · Led recruitment from a high rank
- · Received large commissions
- · Kept recommending it even after withdrawals were blocked
- · Many victims and large losses
Factors that work in your favor
- · You are also an investor who suffered heavy losses
- · Circumstances in which it was reasonable to trust the company's materials
- · Quit as soon as you learned of the problem
- · Returned commissions or made up for the harm
- · No criminal record
How Jisan Law's Criminal Law Center Responds
- 1
Consultation with the managing partner
We hear about the company's structure, your role, your investment and commissions, and sort out whether unauthorized fundraising, the Door-to-Door Sales Act or fraud is at issue.
- 2
Organizing the flow of funds
We put the money you put in, the dividends and commissions received, and your losses into a table.
- 3
Mock questioning and sitting in
We practice in advance for questions about how you recruited people and when you became aware, and go into the questioning with you.
- 4
Submitting a written opinion
We submit a written opinion with materials on the extent of your involvement, your actual gain and your circumstances as a victim.
Lawyers handling these cases
Hansol Kim Managing Partner
Former prosecutor at the Incheon District Prosecutors' Office, the Ansan Branch of the Suwon District Prosecutors' Office and the Hongseong Branch of the Daejeon District Prosecutors' Office
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Bonwoo Koo Managing Partner
Economic criminal cases such as Capital Markets Act violations, investment fraud, embezzlement and breach of trust
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Frequently asked questions
I lost money too. Why am I a suspect?
Because if you were an investor who also brought in others and received commissions, you can be seen as taking part in raising the money. The money you lost is taken into account in the decision and sentence, so organize precisely what you put in and what you received.
I never promised anyone they would get their principal back.
Unauthorized fundraising requires a promise to pay the principal or more, so if there was no such promise, there is room to dispute it. However, if the company's materials or group chat announcements stated fixed returns, merely passing them on can be a problem.
How can I tell whether an MLM company is registered?
Multi-level sales businesses must register with the Fair Trade Commission or the provincial government, and the Fair Trade Commission publishes registration information. Before joining, also check whether the company has a consumer damage compensation insurance contract.