Three businessmen have been sentenced to prison terms by a South Korean court for fraud after convincing investors to fund the recovery of billions of dollars worth of gold they claimed was aboard a Russian “treasure ship” that sank 114 years ago.
The announcement of the discovery of the wreck and its cargo in July 2018 attracted a huge amount of attention as it would have dwarfed the previous record recovery from a sunken vessel – although the company’s claims quickly began to unravel.
The Seoul Southern District Court on Wednesday sentenced the former vice chairman of the Shinil Group, identified only by his family name, Kim, to five years in prison for defrauding investors.
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Another senior executive, named Ryu, was given a two-year term, Yonhap News reported, while a third defendant was sentenced to four years in prison.
Summing up, the judge presiding over the case said, “Their responsibility for the crime is very heavy, given the method and the scale, and it is a case where they swindled many people and took huge gains”.
The judge added that Kim was given a longer prison sentence because he had a previous conviction for fraud.
Shinil Group
Executives of the Shinil Group had claimed in July 2018 that they had located the wreck of the Dmitri Donskoii, a Russian warship that was scuttled by her crew on May 29, 1905, after being damaged in a clash during in the Russo-Japanese War.
The wreck is at a depth of more than 1,400 feet about 1 mile off the coast of the island of Ulleungdo. Video footage of the sunken vessel released by the company showed its name on the stern and damage that it had sustained in the encounter with Japanese warships.
The footage did not show anything within the wreck, although it was sufficient for investors to entrust the Shinil Group with around £5.8 million to raise the contents of its holds.
The company claimed the Russian ship had been carrying the fleet’s funds, some 5,500 boxes of gold bars and 200 tonnes of coins, with an estimated value today of more than £100 billion.
Within days, it became apparent that the location of the wreck had been known for some time and Russian historians dismissed suggestions that the ship had been carrying vast amounts of gold.
South Korean authorities opened a fraud investigation and imposed a travel ban on Shinil Group executives on suspicion that they had made up the story in order to attract capital and promote its new cryptocurrency, Shinil Gold Coin.
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