By Kim Rahn
Staff Reporter
An exclusive mutual financing union for wealthy Gangnam residents that amassed roughly 400 billion won ($330 million) has gone bust, leaving dozens of members burned in its wake.
The collapse of the group ― known here as ``gye'' ― is the third large-scale demise among private savings groups involving well-heeled members since late last year.
Police discovered that loan sharks were involved in managing the money for high returns.
Many members of the group, named ``Mona Lisa,'' recently failed to receive their money when their savings matured, and the group has virtually disintegrated. It had about 80 members who paid five to 10 billion won each since May last year, with the total entrusted amounting to 400 billion won.
The members' losses are expected to grow because some borrowed from loan sharks whom the group organizers invited into the union. The organizers encouraged members to invest more money and encouraged them to borrow from the loan sharks if they didn't have enough. Some of the members put up their houses as security, according to police.
Police said the loan sharks lent cash at an annual interest of 300 percent, allowing the group to amass massive funds in a relatively short period of time.
Separately, the financial authorities are also looking into the way the union's money has been managed due to its alleged connection with the loan sharks.
An unidentified member of the union was quoted by a local daily as saying that ``some members who were not able to raise funds for monthly installments tapped loans from the loan sharks. The union organizer and loan sharks colluded to amass huge funds and now the members are falling prey to their scam.''