South Korean man accused of swindling investors in $2M 'BTS' scheme

Sept. 9 (UPI) -- A South Korean man who claimed he was publishing a glossy coffee table book or pictorial on boy band BTS is under investigation after he raised about $2.5 million from investors.

South Korea's Eastern Jeju Police Station said Wednesday the unidentified 57-year-old man was arrested and is undergoing investigation after raising the substantial amount of money, Yonhap reported. The police had received a complaint the man had stolen the funds.

The defendant, allegedly the chief executive of an investment firm in Seoul, had told clients returns on their investments are "guaranteed." He did not obtain official permission for the fundraising in compliance with local laws. Three to four other accomplices are also under probe, according to the report.

Investigations so far reveal the man opened an office on Jeju Island in March 2018 without officially registering his company. He had managed to collect anywhere from $84,000 to $169,000 per investor.

Police said the man had guaranteed the principal and a 20% return on investments once the pictorial was published. The man also submitted a sample of the unpublished book to convince skeptics. A total of 20 people agreed to invest in the scheme.

The defendant also went as far as paying out dividends at the early stages, but police described the move as "giving money received from investors as proceeds."

Big Hit Entertainment, the South Korean label that manages BTS, has reaped windfall profits since the band was formed in 2011. The company is expected to go public on the local stock exchange.

Newsis reported Wednesday major South Korean tech firms are invested in Big Hit, including Netmarble Corp., a mobile game developer. Netmarble owns about a 25% stake in Big Hit, which is attracting investors, according to the report.