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Types and Countermeasures of the Investment Fraud
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December 01, 2010


In the era of information that IT technology has developed remarkably, crimes have been advanced and developed in various ways. The fraud that one makes effort to earn economic advantages by deceiving tends to be internationalized and globalized. Foreigners' crimes in the nation is increasing and the Koreans' suffering from losses and damages by international fraud is also increasing. In particular, investment fraud that deprives someone of money and properties by deceiving is drawing attention among people. The government authority, financial institutions and others cognized seriousness of investment fraud crimes at home and abroad so that they took various kinds of measures to alleviate risks and impacts that became ineffective and invalid. The fraud crime has been developed in the world so that individuals, enterprises and the government are difficult to judge truth of the transaction. As such, investment fraud at home and abroad is being developed in various and complicated ways. The purpose of the study was to investigate changes and development from historical point of view and to examine actual conditions and types of transactions and to find out causes of each problem and to suggest proper and effective measures. A study on types and measures of investment fraud at home and abroad can expand criminology to help theoretically and methodologically and to prevent citizens from suffering from losses and damages by fraud. This study investigated types, methods, development of affairs and measures, etc of investment fraud at home and abroad that the press publicly disclosed, for instance, Nigerian advance payment fraud, Ponzi scheme, pump-and-dump, collective action fraud, overseas investment fraud, Prime Bank fraud and others. At first, the study defined concept of investment fraud exactly. Limited concept of investment fraud can decrease subject so that the investment included transfer of a part of his or her property and rights to a criminal suspect by transfer of money, transmission and consignment to earn large property and rights. The study investigated investment fraud, for instance, Nigerian advance payment related 419 code, and online investment fraud. And, the study investigated causes of more investment fraud from macroscopic point of view, for instance, creation of speculative culture, structural development of IT technology in the era of information society, and environmental factors of Internet at living lives. And, the study investigated anomie and personal tension because of gap between cultural goal and systematic means from microscopic point of view that were major causes of investment fraud. Learning from the acquaintance was thought to have influence to a certain degree. Everyone can be a victim of fraud crime regardless of age, income, educational background and intelligence. In particular, swindlers often have special knowledge, good manner, soft voice, persistent and persuasive talking and good counteraction against crisis enough to deceive a target of the crime easily. These days, in the cultural climate that economic success has become the highest goal of the life, the one who wants to earn money with small amount of investment cannot be blamed. As Nigerian AFF showed, so people may like to increase property in unreasonable and abnormal way when the government does not manage economic crisis properly and leaders are corrupt and most of the people who want to be economically successful are unable to find out a target of investment. The national consciousness at political structure as well as economic structure at a society may play so much important role. The investment fraud cannot be limited to a country owing to developed communication technology and information to include organized crime groups and to be complicated at global level. To take action against investment fraud at international level, exact diagnosis and measures at various kinds of levels are needed based on contents of this study. In particular, the Government shall take special measures and make best effort to let citizens invest safely and to live good economic lives.

Jitae Hwang

Crime Trends&Analysis

Senior Research Fellow

Jitae Hwang's picture

Research Interest (Major)

Criminal Statistics, Criminal Sociology

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Seungdon Yang

Seungdon Yang's picture

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Korean Institute of Criminology Official Video

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