The alleged investment fraud by Optimus Asset Management now being investigated by prosecutors is arousing suspicions of complicity with those in power.

The private fund operator caused heavy losses to investors by failing to redeem about 500 billion won ($417 million) of deposits.

This case looks like a financial crime by a con artist determined to deceive investors.

Optimus advertised that it would invest funds in “safe” accounts receivable to be paid to government-affiliated or public organizations by their customers and that they would yield an annual return of around 3 percent, which is high in an age of ultralow interest rates.

The funds were sold through large brokerages and banks for three years from June 2017.

From the start, however, Optimus made no investments at all in accounts receivable due to public institutions. The funds it raised were invested in speculative bonds issued by unlisted companies. Some of the funds were invested even in nonbank finance companies that do not receive deposits but make loans to customers for personal use.

Optimus allegedly forged documents to disguise the nonperforming assets as receivables due to public organizations.

Financial regulators approved the fraudulent funds as sellable financial instruments, which banks and securities companies sold without verifying them.

The fraud came to light last month as securities firms suspicious of Optimus’ requests for the extension of the maturities of its funds found out the deception after their own investigations. They accused Optimus.

Maybe a bigger issue is that names of political big shots are appearing in relation with the incident.

Lee Hyuk-jin, former chief executive and founder of Optimus Asset Management, went overseas suddenly on March 22, 2018, and vanished. At that time, he was investigated by the prosecution on five charges including embezzlement and tax evasion.

Strangely, the prosecution did not ban him from leaving the country. He has not returned home yet, so his indictment has been suspended.

Normally, investigative agencies regard embezzlement or tax evasion suspects as flight risks, so they are prohibited from departing the country at an early stage of an investigation.

If the prosecution had rushed to ban his departure or if the Financial Supervisory Service had examined the fund operator earnestly, this financial fiasco may have been prevented.

Above all, how he managed to flee overseas needs to be investigated.

In 2012, Lee was nominated by the then opposition Democratic United Party that preceded the current ruling party as a candidate in the legislative elecitons that year.

A lawmaker of the opposition United Future Party suspects that Im Jong-seok, President Moon Jae-in’s former chief of staff and then secretary-general of the DUP, may have played a role in getting Lee nominated. Lee ran unsuccessfully in a constituency in Seocho-gu, Seoul.

A photo posted in a blog by a Seocho-gu councilor shows Lee posing with Cho Kuk, Moon’s confidant who resigned as justice minister amid strong popular opposition over allegations involving his family.

In December that year, Lee worked for Moon’s presidential campaign in the capacity of a special adviser on financial policy. Moon lost the 2012 presidential election.

Lee and Im are Hanyang University alumni who started their undergraduate studies in 1986.

Lee was elected as an executive director of the Foundation for Inter-Korea Cooperation in its regular general meeting in March 2006. Im took office as chairperson of the foundation in July that year, and still holds the post. The foundation is a nonprofit agency seeking exchange between South and North Korea.

The wife of an Optimus Asset Management director indicted by the prosecution in connection with its fraud worked in the office of Senior Secretary to the President for Civil Affairs in Cheong Wa Dae from October last year and resigned after the fraud came to light.

Whenever large-scale financial frauds break out, investors suspect complicity between fund operators and political heavyweights. To prevent similar deceptions involving private funds, financial regulators must play their supervisory roles properly. And the prosecution ought to investigate suspicions of power-related complicity thoroughly.