Raids nab loan sharks charging victims 540pc

PUBLISHED : Friday, 31 July, 2009, 12:00am
UPDATED : Friday, 31 July, 2009, 12:00am

A clerical worker who borrowed HK$8,000 from a loan shark in 2007 was told she still owed HK$70,000 even after making more than HK$40,000 in interest payments.

The 28-year-old woman, who told police she had to pay HK$1,200 in interest every 10 days, was among 150 victims of a syndicate alleged to have reaped HK$600,000 a month by lending money at an annual rate of more than 540 per cent. The maximum legal interest rate is 60 per cent.

The woman's ordeal was described by police yesterday after they arrested seven people on suspicion of running a loan sharking operation.

Police said the woman was one of more than 150 victims who borrowed more than HK$8 million from the syndicate in the past few years. More than 50 had been identified. Most were low-income earners such as site workers and drivers, but a small number were civil servants, including law-enforcement personnel.

'Two policemen, three Correctional Services Department employees and one fireman have so far been identified as having borrowed money from the syndicate,' a police officer involved in the investigation said.

Police said officers from the technology crime division were checking seized computers and it was possible more victims could be found.

On top of the interest payments, each debtor had to pay a hefty handling fee that was equal to at least 20 per cent of the sum borrowed.

The syndicate advertised in magazines and discussion forums on the internet claiming it could offer loans at low interest rates, the investigator said. 'To lure people to apply for loans, applicants were told that they could receive loans easily and fast even if they had no proof of income.'

Detectives from the regional crime unit of New Territories North began to investigate the syndicate last year after a bank noticed suspicious transactions in two accounts.

On Tuesday, police raided the offices of two companies, including one in Mong Kok, and a number of locations. They arrested four men and three women, including the two proprietors of the companies. Police said the companies were not registered money lenders. Documents, debtors' information, bank cards and computers were seized.

Describing the syndicate as well-organised, another police investigator said: 'Members of the syndicate did not show up or meet applicants. Applicants were asked to send their address proof or identity cards by fax. And then the syndicate contacted applicants through mobile phones. The calls were transferred from one to another. They also used SIM cards bought from convenience stores to avoid detection.'

Police said the syndicate was suspected of forcing some of the debtors to hand over their personal bank accounts, which were allegedly used to collect repayments from other debtors and to launder money.

A senior police officer said it was rare for loan sharks to advertise on the internet. 'We will closely monitor the situation,' the officer said.

The seven suspects aged 23 to 48 were being held for questioning last night and no one had been charged.