Another Regional Housing Cooperative Fraud... Cooperative Head Arrested and Indicted for Embezzling 9 Billion Won by Deceiving Members

Fraud, Embezzlement, and Breach of Trust Charges... Attempt to Cover Up Using New Members' Money

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[Asia Economy Reporter Yoo Byung-don] Officials of the Mok4-dong regional housing association promotion committee in Yangcheon-gu, who deceived about 100 union members by inflating the secured land use rights area and lied to extort about 9 billion won in membership fees, have been brought to trial.

The Criminal Division 1 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Kim Won-ji) announced on the 8th that it has arrested and indicted A (53), the chairman of the promotion committee, on charges including fraud, embezzlement, and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

According to the prosecution, from 2017 to 2019, A inflated the actual land use rights acquisition rate, which was only 7 to 26%, to 60 to 80%, and falsely promoted that high-rise apartments, which could be occupied in 2021, could be built in areas where upgrading of district unit plan usage was not possible, thereby embezzling 9 billion won in membership fees from 102 victims.

Additionally, it was found that from February to August 2018, A submitted false supporting documents to the trust company and embezzled about 1 billion won in service fees. He is also charged with using 5.3 billion won of the promotion committee's funds for a private villa in Jeju Island, tourism, golf, and entertainment until July 2020, and lending 3 billion won to another regional development agency he operated.

During the same period, B (60), the general director who helped A manage the promotion committee's documents and funds, was also indicted without detention on charges including aiding fraud. B was also investigated for conspiring with A in February 2018 to embezzle 880 million won in service fees.

They delayed damage reports by using a so-called "Ponzi scheme" method, where membership fees from new members were used to pay the membership fees of members who requested withdrawal.

The Yangcheon Police Station in Seoul, which received the complaint in October 2020, forwarded only the embezzlement and breach of trust charges in February but did not forward the fraud charges. However, the prosecution requested reinvestigation and supplementary investigation. Eventually, after cooperation between the prosecution and police, A was arrested last month.

The trust funds of the promotion committee have been completely exhausted, and the land they secured is currently undergoing auction procedures, resulting in the redevelopment project being canceled. Additional victims are currently under police investigation.

A prosecution official stated, "We will thoroughly maintain the prosecution to ensure that the defendants receive sentences commensurate with their crimes and do our best to recover criminal proceeds to restore actual damages."

This content was produced with the assistance of AI translation services.