Gang Involving Financial Institution Executives in 5 Billion Won Jeonse Loan Fraud Arrested... Targeting Young Adults and Intellectually Disabled

Busan Police Agency.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Dooyul] A group led by a financial institution executive, who carried out a 5 billion KRW jeonse loan fraud scheme using the names of young adults starting their careers and intellectually disabled individuals, has been arrested by the police.

The Busan Metropolitan Police Agency's Anti-Corruption Economic Crime Investigation Unit announced on the 20th that they have arrested four people, including Mr. A, a man in his 40s and a financial institution executive, and Mr. B, a man in his 30s who acted as a recruiter, on charges of fraud, and have booked 44 others without detention.

According to the police, from January 2020 to January this year, Mr. A and his group used unsold apartments and villas in the Busan area to obtain about 30 loans from banks, embezzling a total of 5 billion KRW.

The group consisted of financial workers, developers, and licensed real estate agents, with the ringleader, Mr. A, a current executive at a financial institution, leading the entire operation including credit rating inquiries and funding for crime preparation.

Mr. B, a man in his 30s who acted as a recruiter, gathered intellectually disabled individuals and young adults starting their careers, housed them together in officetels, managing them in the form of an "adult outing group," and facilitated their loan applications.

Suspect Gang Organization Chart. [Image Source=Busan Police Agency]

Mr. A’s group exploited the fact that banks do not conduct thorough on-site inspections during jeonse deposit loan processes, repeatedly changing tenants in the same building to obtain multiple jeonse deposit loans.

They also used a method of forging lease contracts to make it appear as if there was no deposit when taking over unsold rental buildings owned by developers, then received loans and set mortgages, making it difficult for tenants to recover their deposits.

According to the police, they deceived unemployed individuals into appearing as regular employees and even obtained credit loans worth about 30 million KRW.

Among those who received credit loans was Ms. C, a woman in her 20s with an intellectual disability.

Taking advantage of Ms. C’s low intellectual level, they issued a credit card which was squandered on entertainment expenses, and after securing loans worth about 20 million KRW using various insurance policies taken out by Ms. C’s parents as collateral, they canceled the insurance and embezzled even the surrender value.

The police applied for pre-indictment seizure and preservation of criminal proceeds, including an apartment worth about 1.2 billion KRW owned by the suspects, and received approval for four cases, with three more cases underway.

A police official stated, “Since fraud is not subject to pre-indictment seizure and preservation, we proved forgery of private documents and obtained approval from the court. To prevent recurrence of similar crimes, we plan to recommend institutional improvements to enable financial institutions to share and view loan information for each unit of multi-family housing before loan execution.”

Modus operandi, characteristics. [Image source=Busan Police Agency]

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