Police have launched an investigation into 215 doctors accused of inflating their bank balances in collusion with brokers to secure loans for opening hospitals.

Authorities announced March 27 that the doctors have been charged with fraud and related offenses. The total amount of illicit loans is estimated at roughly $975 million.

The doctors allegedly borrowed money from brokers temporarily to inflate their account balances, which they then used to obtain preliminary guarantees from a government-backed credit guarantee program. The program provides loan guarantees of up to 100% of an applicant's equity, but qualifying for high-value guarantees above $375,000 requires demonstrating an equivalent amount in capital — creating the incentive for artificially inflated balances.

Last September, police uncovered evidence of a loan broker facilitating the illegal loans while operating under the guise of a hospital startup consulting service, leading to the seizure of bank accounts and related materials.

The practice of artificially inflating account balances to secure loan guarantees, known in the industry as pumping, appears to be widespread. In a related case last November, two practitioners, four medical device company employees, and a loan broker were referred to prosecutors on similar fraud charges.

Police have launched an investigation into 215 doctors accused of inflating their bank bal …

215 Doctors Under Investigation: How Loan Fraud in Hospital Startups Exploded to 130 Billion Won