Labor ministry arrests business owner for 580 million won insurance fraud

The labor ministry said Thursday it has arrested a business owner in Daegu for orchestrating a scheme that defrauded the national employment insurance fund of 580 million won ($423,884). The suspect, identified only as A, operated five workplaces in the region and collaborated with brokers to recruit 57 fictitious workers between March 2019 and February 2026.

A is accused of falsely reporting these individuals as insured employees and daily workers to illegally claim 540 million won in job-seeking allowances, along with smaller amounts from employment maintenance support funds and special incentives for hiring youth.

Authorities described the case as an organized operation where the business owner and brokers divided roles to repeat the crime over a long period. After the investigation began, A attempted to coordinate testimonies with accomplices and destroy evidence using encrypted messaging apps such as Telegram and Signal.

The Daegu District Court issued an arrest warrant on Sept. 16, citing the systematic nature of the offenses and a high risk of flight since the suspect has no fixed residence and has shown no intention to return the illicit gains.

Hwang Jong-cheol, head of the Daegu Regional Employment and Labor Office, emphasized the gravity of the offense. "Unemployment benefits are a precious employment insurance fund created to support the livelihood stability and re-employment of the unemployed," he said. He added that authorities will continue to track down and strictly investigate any organized or intelligent fraud involving collusion between business owners and brokers.