Alleged $5 million Ponzi-style scheme rattles Korean American community

Korean real estate fraud allegations are spreading across the Korean American community as multiple investors claim they have not received promised returns from a Norwalk-based investment firm. Some investors say they are preparing criminal complaints against the company.

Posts recruiting alleged victims have recently appeared on Korean online communities and social media platforms. The posts reference a Korean real estate firm in Norwalk and claim that funds invested in hard-money loans and property flipping projects have not been repaid as agreed.

In addition, the posts invite investors who are experiencing delays to join a group effort. A KakaoTalk group chat created to coordinate legal action had 71 participants as of 3 p.m. on February 18.

The firm at the center of the controversy has, in recent years, shared information about U.S. real estate investing through YouTube. The channel reportedly has more than 30,000 subscribers.

However, several investors now describe the situation as resembling a Ponzi scheme. In such schemes, returns to earlier investors are paid using funds from newer investors. Payments typically stop once new inflows decline.

According to investors, communication with the company has become increasingly difficult in recent months.

An individual identified only as Park, who is organizing a legal response, said about 20 investors have agreed to pursue legal action. He told the Korea Daily that some investors have not recovered their principal and that the company has cited financial difficulties as the reason for delays.

Park said the group is preparing a criminal complaint. Investors involved in the legal effort claim total losses of about $5 million. Individual investments reportedly ranged from $200,000 to $300,000.

He added that more people have contacted the group but that the initial legal action will proceed with those who have formally joined. He believes the actual number of affected investors may be higher.

According to participants, the firm promoted two main investment structures. One involved flipping properties, meaning purchasing, renovating and reselling homes. The other involved one-year hard-money loans.

Investors say the projects were typically described as lasting three to six months. They were told that principal would be returned at maturity. Some also claim they were promised annual returns of 10% to 14%.

Meanwhile, some online posts and YouTube videos suggest the number of victims could reach into the hundreds and losses could total tens of millions of dollars. However, those figures have not been independently verified.

The controversy has also gained attention on YouTube. A recent video by “Mikook Ajae John” cited community posts and email tips alleging real estate investment fraud in the Los Angeles Korean American community. The video included claims that interest payments stopped after several months and that principal has not been returned.

The Korea Daily attempted to contact representatives of the real estate investment firm by phone, email and text message. As of 5 p.m. on February 18, no response had been received.

BY HANKIL KANG  [kang.hankil@koreadaily.com]