<Direct Interview> Attorney Kim Myeong-seok in charge of the 100 billion won damage case at Arttech
2024-10-29
“9% rate of return? Only private loans are accepted”
There is an investment product that MZs are excited about recently. This is ‘art tech’, which invests in artwork. As people who are ignorant about art are focused on ‘principal guarantee’ and ‘high interest rates’, Ponzi schemes against them are becoming rampant.
As interest in art grew, the size of the art market grew and diversified, investment in art came into the spotlight as a new means of investment, and a new term, ‘Art-Tech’, combining art and investment, was even born. In addition, the lowering of entry barriers to art tech, as expensive artworks could be purchased with piece investments, also served as an opportunity for investment to flock.
Taking advantage of this trend, many companies have emerged to attract investors by guaranteeing the resale of art works. However, contrary to the original promotional content, more and more victims are unable to recover their investment. The most well-known company is ‘Gallery K’. Currently, victims are communicating through open chat rooms, and about 400 people are complaining of damage.
If the non-return of investment principal continues, the damage will amount to around 100 billion won.
In this situation, Daeryun Law Firm (Limited) (hereinafter referred to as Daeryun) formed a team (hereinafter referred to as Relief Team) to provide relief to victims of Gallery K ArtTech fraud and initiated a class action lawsuit on their behalf.
-Please explain about the relief team.
▲One general attorney who was a former chief prosecutor, two attorneys with extensive experience in defending similar cases, and one legal office director are in charge of the case and perform tasks such as consultation, writing, and communication with investigative agencies. These are all people who have a lot of experience with fraud cases.
-How did you come to help the victims?
▲Initially, we consulted with one or two victims. Bank interest is at most 4% per year, but 7-9% per month is the rate of return on interest rate bonds. In order to give 5% to art dealers, there must be maintenance costs for the company, so it seems that at least 20% of art rental fees must be charged to maintain the company.
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However, when I heard that unless it was the Mona Lisa, the artwork was leased with a monthly lease fee of 20% of the price, I thought it was a realistically unmaintainable agreement.
This type of fraud is difficult to prove if one victim files a complaint, and the intent of the fraud can only be proven if it is acknowledged that multiple victims were harmed in the same way. Therefore, we came to the conclusion that there was a need to file a group complaint, so we formed a team and filed a group complaint.
-How many victims have requested to file a complaint regarding this incident, and what is the amount of damage?
▲The relief team filed the first complaint in early September and the second complaint at the end of September. There are a total of 25 complainants, and requests for counseling have continued to come in since the second complaint. To date, the total amount of damage is approximately 1.4 billion won. However, although there are more than 400 victims and the amount of damage amounts to 100 billion won, it is impossible to predict how much the number of counselors will increase because other law firms are also in charge of filing lawsuits.
-I understand that there are many ways to scam Arc Tech. Please explain what Gallery K’s method was.
▲The victims of this case were small investors who had no interest in art but were attracted by the guarantee of principal and the distribution of large profits every month. Gallery K capitalizes on this investor psychology by investing money, purchasing art with the invested money, and renting the purchased art elsewhere to collect rental fees.
An agreement that is realistically unmaintainable
“Sue on behalf of 25 people… Counseling continues to increase”
They gathered investors by saying that they would take care of all these processes, pay 7 to 9% of the investment amount as profit every month, and recover the principal by reselling the artwork at the end of the contract period. They have been recruiting art dealers and investors in a multi-stage manner, saying that they will give 5% of the invested amount as a commission to the person in charge of recruiting investors (art dealer) every time they recruit one person.
In the end, it had no choice but to operate in a 'turnaround' manner, mobilizing art dealers to recruit investors and using the investment money to cover the profits of previous investors. It is presumed that this 'turnaround' also reached its limits and ended up throwing up both hands.
-Recently, the police station is also working hard to investigate the Art Tech fraud case. What is the team’s opinion on the current investigation situation?
▲Initially, our relief team submitted a complaint to the Metropolitan Investigation Team of the Seoul Metropolitan Police Agency. However, it was transferred to the Dongdaemun Police Station, where the company is located, but as complaints continued to be filed and the scale grew, it was transferred again to the Metropolitan Investigation Team for investigation.
The investigation did not expand because our relief team filed a group complaint. In addition to the people we complained about, many other complainants are filing complaints. From the police perspective, it appears that the case is automatically growing because the number of complainants continues to increase rather than intentionally expanding the investigation.
-As someone who has been in charge of many Ponzi fraud cases, including the Art Tech fraud, is there anything you would like to advise readers?
▲The world operates on the common sense oath and nothing is free. No matter what anyone says, it is important to keep in mind that saying that high profits are guaranteed will inevitably lead to setbacks. You must make any decision, whether investment or otherwise, within a story that makes sense based on common sense. Also, if you are uncertain about whether an investment is unreasonable, be sure to consult with an expert such as a lawyer before making a decision.
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