By Jhoo Dong-chan
An outlandish tale about a sunken Russian “treasure ship,” which a Korean firm claimed to have found, is turning into a web of fraudulent and deceitful practices to rake in money through false information and stock price manipulation.
Police recently began investigating Shinil Group on allegations that current company President Choi Yong-seok is a just puppet boss and a former Shinil Group chairman surnamed Yu has continuously engaged in company operations related to the Russian shipwreck under a false identity.
Gangseo Police Station said it has placed “travel bans on key Shinil Group personnel” and will soon summon them for questioning.
Believing Yu is the mastermind behind the case, it is also looking to establish the former chairman's whereabouts.
According to a recent report by local daily JoongAng Ilbo, the 43-year-old was involved in a series of past fraud cases related to the real estate and reconstruction businesses here.
He left the country for Vietnam seven years ago after serving a jail term at Uijeongbu Penitentiary in 2008.
Having since used the alias ”Ji-beom,” Yu established Shinil Group Singapore in the city-state last month to issue the so-called “treasure ship” virtual coin to attract money from investors.
The newspaper quoted Yu's acquaintance as saying that the Singapore-based firm is headed by Yu's sister Ryu Sang-mi who is also Choi's predecessor at the Korean Shinil Group.
However, there is an allegation that she just allowed her name to be used for her brother's businesses, and in reality she is a housewife living in Incheon.
“Shinil Group Singapore raked in over 50 billion won ($44.75 million) from over 100,000 investors. Shares related to the sunken ship then plunged,” the acquaintance was quoted as saying.
“Since suspicions were mounting about the authenticity of the ship's value, Yu also recently changed Shinil Group Singapore's head into someone surnamed Song.”
Korea's Shinil Group held a press conference immediately after the police launched the investigation to deny the allegations.
“The company has nothing to do with the Shinil Gold Coins being sold by Shinil Group Singapore,” Choi said during the press conference Thursday.
However, he failed to clearly explain why Ryu was operating the Singapore-based company of the same name that had conducted private sales of cryptocurrency while reportedly promising dividends from profits from the gold found on the ship.
He also backed off from the company's previous claim that the sunken Russian ship identified as the Dmitrii Donskoi, which sank 113 years ago, was carrying 200 tons of gold worth 150 trillion won.
“There's no way for us to figure out whether there are gold coins or bars on the Donskoi, and if there is, how much.”
Shinil Group said in mid-July that it had found a shipwreck, which it believed to be the 6,200-ton Dmitrii Donskoi that went down near Ulleung Island during the 1904-1905 Russo-Japanese War.
Shinil Group was also accused of making unfair gains by manipulating the share price of Jeil Steel, a tech-heavy Kosdaq-listed firm.
The share price of Jeil Steel, which Shinil Group allegedly agreed to acquire shares of, also skyrocketed on the day immediately after the announcement, but has since plunged for three consecutive days due to mounting suspicions about the authenticity of the find.
The firm's share price stayed at the 1,500-won level last month, but reached over 5,400 won immediately after Shinil Group's announcement.
The company said in a press release that it has no relationship with the Russian treasure ship, but the efforts fell short of easing the investor frenzy.