"80% Support for Land Use" Scam Steals 18.8 Billion Won in Union Contributions

Complaint Filed Against Chairman of Gwangju Housing Association Promotion Committee

The chairman of a local housing cooperative promotion committee in Gwangsan-gu, Gwangju Metropolitan City, has been accused of embezzling 18.8 billion KRW in member contributions, prompting the police to launch an investigation.

On the 6th, the Gwangju Police Agency announced that they are investigating Lee, the chairman of the local housing cooperative promotion committee, on charges of fraud and embezzlement.

According to cooperative members, Lee is suspected of recruiting about 500 members through false and exaggerated advertisements in 2021 and embezzling 18.8 billion KRW in contributions.

Lee allegedly deceived members by claiming that the land use consent rate within the project site was close to 80%, and that the cooperative would be approved between February and March 2022.

However, it was revealed that the actual consent rate was only 24%, far below the cooperative establishment standard of 80%.

Lee is suspected of siphoning off some of the cooperative contributions through a sales agency (located in Gwangsan-gu, Gwangju) that he effectively controls, using an intermediary agency (located in Gangnam-gu, Seoul).

It is presumed that Lee delegated the service contract related to the local housing project to the intermediary agency, which then passed it on to the sales agency.

The service contract between Lee and the intermediary agency is valued at 10.3 billion KRW, while the exact amount for the sales agency is unclear. However, the sales agency reportedly recorded sales of 3.7 billion KRW in its founding year, 2021.

Coincidentally, the sales agency’s address is the same as the cooperative promotion committee’s office, and the CEO is Won, who is presumed to be Lee’s parent. The company directors are registered as Lee himself and his brother.

To promote the local housing project, Lee took out loans against eight of the sixteen apartments he purchased, valued at about 2.9 billion KRW each, with the maximum loan amount exceeding the market price by more than three times.

Among cooperative members, there are various opinions, including suspicions that fake documents were fabricated to respond to requests for refunding contributions after the real estate sales.

Lee also deposited 7.4 billion KRW of cooperative contributions into a trust company account but has failed to properly explain the reasons for withdrawals from the account.

As of the end of last year, the account balance was confirmed to be only about 34 million KRW.

One cooperative member said, "Lee never intended to promote the local housing project in good faith and sincerity and colluded with the intermediary agency to systematically embezzle money."

They added, "Lee even signed a written pledge to return the contributions by November last year but has been delaying with strange excuses. We urge that the investigation be escalated to an arrest to prevent him from hiding assets and to restore the members’ losses as soon as possible."

The police plan to focus on proving the charges by investigating the reasons for withdrawals from the trust account managed by Lee and tracing where the funds went afterward.

Meanwhile, separate from the criminal case, there are six civil lawsuits between about 300 cooperative members and Lee regarding claims for the return of unjust enrichment, with some members winning or losing in the first trial.

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