Gang Involved in Embezzling Hundreds of Billions in Jeonse Deposits Through Unfunded Gap Investment Arrested

Embezzlement of 31.2 Billion KRW Deposit from 118 Tenants
Also Received Rebates Worth Approximately 3.5 Billion KRW as Commission

Seoul Metropolitan Police Agency
Photo by Yonhap News

[Asia Economy Reporter Choi Taewon] A group of rental business operators who defrauded tenants of hundreds of billions of won under the pretense of security deposits through capital-free gap investment have been arrested by the police.

The Seoul Metropolitan Police Agency's Financial Crime Investigation Unit announced on the 28th that they arrested eight people, including rental business operator Mr. A (31), in September on charges of defrauding 31.2 billion won in security deposits from 118 tenants while owning 413 villa units.

Mr. A established a business around June 2018, recruited employees, and committed the crime by searching for mid-to-low priced newly built villas with high rental demand that could be 'simultaneously processed.'

Simultaneous processing refers to a method where, due to the buyer's inability to pay the purchase price, the security deposit paid by the tenant is used as the purchase price. The sale and lease contracts are conducted simultaneously, and once the seller receives the security deposit, ownership is immediately transferred to the buyer.

Mr. A and his group divided roles such as searching for newly built properties, recruiting tenants, and organizing contract documents, systematically purchasing newly built villas without capital. In this process, they also purchased large quantities of illegal buildings in unsold conditions or problematic properties that had been unsold for over a year, on the condition of receiving high rebates.

The suspects were confirmed to have received illegal profits totaling approximately 3.5 billion won by accepting rebates worth several million to tens of millions of won per case as sales commissions from builders and sales agents.

Furthermore, the suspects did not disclose to the victims that they were purchasing newly built villas using only the tenants' security deposits, that the sale price and the lease price were the same or even higher, or that the suspects were receiving rebates from the builders.

A police official stated, "We will continue to investigate whether builders and sales agents were accomplices."

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