Ex-Boohwal Singer Kim Jae-hee Implicated in Massive ₩200 Billion Ponzi Scheme Scandal in South Korea

Former Boohwal Vocalist Kim Jae-hee Embroiled in ₩200 Billion Ponzi Scheme

A major financial fraud scandal has rocked South Korea, with former Boohwal rock band vocalist Kim Jae-hee, 54, among 69 individuals forwarded to prosecutors for their alleged roles in a massive ₩200 billion ($150 million) Ponzi scheme. The illicit operation, which ran for nearly two years, reportedly stole ₩19 billion from hundreds of victims.

The Anatomy of a Sophisticated Scam

The Incheon Metropolitan Police Agency recently announced that Kim Jae-hee, who served as Boohwal's fourth vocalist in the 1990s, was part of a group that actively promoted the fraudulent investment scheme. Two alleged ringleaders, identified only as A (43) and B (44), were previously arrested, while Kim and 67 others were booked without detention.

Investigations reveal that A and B orchestrated the elaborate fraud from December 2022 to August 2024, operating from a central headquarters in Seoul’s affluent Gangnam district and extending their reach through 35 nationwide branches. The scheme successfully lured approximately 30,000 individuals, raising an astounding ₩209 billion. Among these, 306 people were directly defrauded of ₩19 billion.

The fraudsters enticed investors with promises of lucrative returns, claiming that funds invested in an online shopping mall business would guarantee principal repayment and a staggering 150% return over 300 days, distributed as 0.5% daily. Another attractive, yet deceptive, offer involved investing in a planned overseas bank, promising guaranteed principal and a 40% interest rate. To broaden their network, the group employed a multi-level marketing-like structure, designating "advisor-brunch-ambassador" tiers.

Kim Jae-hee's Role and Compensation

Kim Jae-hee, leveraging his public profile as a former rock star, played a significant part in the promotional activities. He was registered as a vice chair and internal director within the organization. Police state that Kim actively participated by visiting various branches, hosting business briefings, and even performing songs to encourage potential investors to join.

Despite his prominent role in recruitment, investigators noted that Kim Jae-hee himself did not invest in the scheme. However, he received substantial compensation for his involvement, including a ₩100 million salary. Additionally, he benefited from other perks such as a passenger vehicle valued between ₩60 million and ₩70 million, and gold items worth approximately ₩80 million. Kim, the younger brother of the late Boohwal vocalist Kim Jae-ki, reportedly informed police that he "did not know it was a scam."

Devastating Impact on Victims

The Ponzi scheme eventually unraveled when the ringleaders could no longer sustain the promised exorbitant returns to earlier investors. The collapse left a trail of financial devastation, particularly among the elderly. Most victims were reportedly in their 60s to 80s, with individual investments ranging from a modest ₩1 million to over ₩1 billion. Heart-wrenchingly, some victims had invested critical funds intended for cancer treatment or compensation from home redevelopment, putting their livelihoods and futures at severe risk.

Police meticulously analyzed 40,000 transactions across 22 bank accounts associated with the group, identifying ₩9.38 billion in criminal proceeds. Authorities have requested pre-indictment preservation for these funds and anticipate that more victims may still come forward. The ongoing investigation highlights the severe consequences of such fraudulent schemes and the importance of due diligence in investment opportunities.