Jeonse Fraud 'Geonchukwang' Gang First Prosecuted Under Organized Crime Charges... Embezzled 30.5 Billion Won

The prosecution has indicted the so-called 'Construction King' gang under the Organized Crime Group Act for the first time in a domestic jeonse fraud case.

The Criminal Division 5 of Incheon District Prosecutors' Office (Chief Prosecutor Park Seong-min) announced on the 27th that they have indicted a total of 35 people, including construction contractor A (61) and licensed real estate agents and brokerage assistants, on charges of fraud and others.

A and others are accused of owning about 2,700 apartments and villas in the Michuhol-gu area of Incheon from March 2021 to July last year, and embezzling 30.5 billion won in jeonse deposits from 372 tenants.

The amount involved in their criminal charges was 12.5 billion won at the time of the first indictment in March, but it more than doubled after additional investigations.

Among the 35 defendants indicted this time, the prosecution applied charges of organizing and joining a criminal organization to 18 people, including A, who were actively involved in the crimes. Ten of them, including A, were previously indicted on charges such as fraud and are currently on trial.

This is the first time that a gang committing jeonse fraud has been indicted on charges of organizing a criminal organization.

The prosecution believes that A colluded with licensed real estate agents and others to systematically commit jeonse fraud.

According to the investigation, A operated multiple brokerage offices under the names of licensed real estate agents and assigned them to exclusively handle the brokerage of houses he owned.

He referred to himself as the chairman and had a 'brokerage team' overseeing directors and each brokerage office, dividing ranks such as general manager, manager, deputy manager, and team leader by office and assigning roles accordingly.

A managed the organization through various meetings including weekly meetings, differential salaries according to rank, performance bonuses based on results, and a promotion system.

A notice informing that the apartment is under investigation for a jeonse fraud case is posted on the front door of an apartment in Michuhol-gu, Incheon.
[Photo by Yonhap News]

Meanwhile, the prosecution confirmed that A embezzled company funds worth over 10 billion won and additionally applied charges under the Act on the Aggravated Punishment of Specific Economic Crimes.

He is investigated to have embezzled a total of 11.7 billion won, including diverting 4 billion won of construction payments for newly built apartments from a construction company in January 2018 to secure a project site in the Donghae Mangsang district.

The prosecution believes that A used the jeonse deposits to cover the embezzled construction payments, which led to auctions of the owned houses and non-payment of jeonse deposits.

The prosecution also confirmed that A submitted false documents to the court during the pre-trial detention hearing (warrant review) in December last year on charges including fraud, and applied charges of forgery and use of private documents.

A prosecution official stated, "To help the victims of the jeonse fraud, the shares of the project implementer and the project site of the Donghae Mangsang district project promoted by A will be frozen through pre-indictment seizure and preservation."

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