Years after 'death' of mastermind of Korea's biggest Ponzi scheme, victims await justice
Published: 28 May. 2026, 07:00
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- CHO JUNG-WOO
- [email protected]
Audio report: written by reporters, read by AI
![From left: Cho Hee-pal speaks at a seminar in 2008; Cho lies in a transparent coffin during a funeral procession in Yantai, China, captured in video footage. [RESPECTABLE HOUSEHOLD ECONOMY]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/68aa1266-840d-4a28-9cd9-cc0800e94da8.jpg)
From left: Cho Hee-pal speaks at a seminar in 2008; Cho lies in a transparent coffin during a funeral procession in Yantai, China, captured in video footage. [RESPECTABLE HOUSEHOLD ECONOMY]
[KOREAN CRIME FILES #19]
Behind the glitz and glamour seen in pop culture, Korea’s grimmest and most harrowing crime stories, some more well-known than others, continue to haunt society today. The Korea JoongAng Daily takes a deep dive into some of these stories, sharing a glimpse into the darker side of society as well as the most up-to-date known facts. — Ed.
On the night of Dec. 9, 2009, Coast Guard officials boarded a fishing boat returning to port in Taean County, South Chungcheong and surrounded a man on deck.
“Freeze! Put your hands up!” one officer shouted.
The officials stormed onto the vessel and began searching, expecting to uncover bags of cash or drugs. Instead, they found a passport left behind.
When they opened it, they saw a name that stunned them.
It belonged to Cho Hee-pal, the mastermind behind what remains Korea’s largest Ponzi scheme.
But the discovery came too late. Cho had already fled to China.
How the scheme worked
Cho’s fraud operation, which preyed on ordinary people seeking financial security, stole an estimated 5 trillion won ($3.4 billion) from 70,000 victims.
Cho launched his business empire in 2004, opening multiple companies across the country, starting in Daegu.
On the surface, the business seemed legitimate. Investors were told they were leasing health devices, such as massage chairs, to be installed in places like hair salons and motels, where customers would pay to use them. Cho’s company promised to manage the machines and distribute profits to investors.
The targets were often vulnerable: retirees, unemployed workers and people still struggling in the aftermath of the 1997 Asian financial crisis.
The returns sounded irresistible.
For every machine purchased, investors were promised an average daily dividend of 35,000 won. An initial investment of 4.4 million won would return 5.81 million won after just eight months — an annual yield of roughly 48 percent.
At the time, average bank interest rates hovered around 4 percent.
And remarkably, the dividends arrived exactly on time every single day for four years.
That consistency built trust.
But the machines themselves generated little real profit.
![Cho Hee-pal speaks at a seminar in 2008. [RESPECTABLE HOUSEHOLD ECONOMY]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/162cfcdf-f929-4797-8bbf-ec97b6eaaf80.jpg)
Cho Hee-pal speaks at a seminar in 2008. [RESPECTABLE HOUSEHOLD ECONOMY]
The dividends were being paid using money from new investors.
It was a classic Ponzi scheme.
As more people joined, more money flowed in. And as long as new investments continued, Cho could keep paying old investors.
Until he couldn’t.
The runaway
Cho knew the collapse was coming.
Three months before his disappearance, he began preparing for a carefully orchestrated escape.
He announced to investors that dividend payments would no longer be recorded in their bankbooks. Instead, they would receive text message notifications, and anyone wishing to claim their earnings could visit the office in person.
Then he added a curious warning,
“Don’t tell other companies. They’ll copy us.”
Every morning at 8:30 a.m., investors received text messages confirming their dividend payments.
They were all fake.
At the same time, Cho urged people to invest even more, warning that profit rates would soon decline.
![Cho Hee-pal waves a flag at an event in September 2008. [RESPECTABLE HOUSEHOLD ECONOMY]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/251a7909-7f82-47ec-a865-0365572211d3.jpg)
Cho Hee-pal waves a flag at an event in September 2008. [RESPECTABLE HOUSEHOLD ECONOMY]
Victims poured in everything they had: their dividend earnings, retirement savings, marriage funds and even bank loans.
By then, Cho’s network had expanded to around 80 offices nationwide, including shell companies that existed only on paper.
Then, at the height of the scheme, the offices suddenly shut down.
Phones went unanswered.
When police raided Cho’s headquarters, they found it empty. Everyone involved had vanished, and all critical records had been removed.
![Timeline of key events in the Cho Hee-pal fraud case [YUN YOUNG]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/dd2e0cab-4388-482f-94ba-4b6736eb91d0.jpg)
Timeline of key events in the Cho Hee-pal fraud case [YUN YOUNG]
The mysterious whereabouts
Police requested an Interpol Red Notice, but Cho had disappeared.
According to an acquaintance who was unknowingly recruited to help with his escape, Cho boarded the boat carrying nothing but a small pouch.
Investigators suspect it contained records of hidden assets and a list of officials he had bribed.
Those suspicions were not unfounded.
In May 2009, a police officer from the Daegu Metropolitan Police Agency was arrested after returning from China, where he had secretly met Cho. Authorities said he received around 1 billion won in bribes in exchange for leaking information about the investigation and delivering payments to other officials on Cho’s behalf.
Cho had also reportedly been tipped off before police raids.
Then, four years after his disappearance, authorities made a dramatic announcement.
Cho, they said, had died in China of heart disease.
![Cho Hee-pal, whose reported death has remained the subject of suspicion, lies in a transparent coffin during a funeral procession in Yantai, China, captured in video footage. [RESPECTABLE HOUSEHOLD ECONOMY]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/18e5a7a6-c1de-4568-9441-e5a3db75dd37.jpg)
Cho Hee-pal, whose reported death has remained the subject of suspicion, lies in a transparent coffin during a funeral procession in Yantai, China, captured in video footage. [RESPECTABLE HOUSEHOLD ECONOMY]
Investigators even released footage of his funeral. In the video, Cho appeared in a transparent coffin, surrounded by his son and other family members.
Cho’s nephew, one of the men who helped him flee Korea, later told SBS investigative program "Unanswered Questions" (1992-) that the funeral was filmed because they feared people would not believe Cho had died.
But the announcement only fueled more suspicion.
Sightings of Cho poured in.
His cremation certificate also raised eyebrows, as the issuance date appeared to precede both his reported death and cremation.
Authorities said they could not verify his DNA because the body had already been cremated.
Reinvestigation
Despite officially declaring Cho dead, police kept him on the wanted list because his family never formally registered his death.
Then came a crucial piece of evidence. It was a recorded phone call involving Cho’s nephew.
In the call, the nephew tells another person that his “uncle is currently extremely angry,” adding that “uncle could only think in this way.”
The call was recorded in February 2012.
![Victims of Cho Hee-pal’s fraud scheme call for a reinvestigation into the case outside the Daegu District Prosecutors’ Office on Dec. 18, 2015. [JOONGANG ILBO]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/48a4a25f-4c27-4b73-860f-eac67f3a4e88.jpg)
Victims of Cho Hee-pal’s fraud scheme call for a reinvestigation into the case outside the Daegu District Prosecutors’ Office on Dec. 18, 2015. [JOONGANG ILBO]
Cho had supposedly died three months earlier.
The revelation reignited the case.
Police and prosecutors soon began battling over who would lead the renewed investigation.
The police alleged that a prosecutor had accepted bribes from Cho and requested an arrest warrant. Prosecutors rejected the request and instead formed a 13-member special investigation team.
Later, that prosecutor was found to have accepted 3.5 billion won in bribes.
Frustrated by the authorities’ focus on corrupt officials rather than finding Cho, the victims began conducting their own search.
Through persistent persuasion, they convinced Cho’s nephew to reveal the whereabouts of Cho’s right-hand man, Kang Tae-yong, who had managed the organization’s finances.
In October 2015, Kang was arrested and repatriated from China.
Ten days later, Cho’s nephew was found dead in an apparent suicide.
![Investigators escort Cho Hee-pal's close aide, Kang Tae-yong, into the Daegu District Prosecutor's Office after his arrest and repatriation from China on Dec. 16, 2015. [JOONGANG ILBO]](https://koreajoongangdaily.joins.com/data/photo/2026/05/28/9e2971a1-0582-4726-a620-5ea6ac830c93.jpg)
Investigators escort Cho Hee-pal's close aide, Kang Tae-yong, into the Daegu District Prosecutor's Office after his arrest and repatriation from China on Dec. 16, 2015. [JOONGANG ILBO]
Just two days after his death, another of Cho’s close aides — the man responsible for the scheme’s computer operations and digital records — turned himself in.
Seven years after Cho’s escape, the case had been revived, giving victims hope they might finally get answers.
But in June 2016, prosecutors announced they believed Cho was dead and closed the case, citing insufficient evidence that he was still alive.
For many victims, the decision was devastating. Authorities have recovered 95.2 billion won in hidden assets.
Divided among 70,000 victims, that amounts to just 1.36 million won per person — a mere fraction of what many had poured in.
His grave remains at a memorial park in North Gyeongsang, but so do the unanswered questions surrounding his death.
BY CHO JUNG-WOO [[email protected]]
with the Korea JoongAng Daily
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