Police Send 42 Appraisers and Brokers Involved in Jeonse Fraud 'Fake Appraisal' to Prosecution

Appraisers and brokers involved in a jeonse fraud scheme, who raised appraisal values as demanded by the fraudsters, have been handed over to the prosecution.

On the 20th, the Financial Crime Investigation Unit of the Metropolitan Investigation Division at the Seoul Metropolitan Police Agency announced that they had sent 42 appraisers and brokers to the prosecution the previous day on charges including violation of the Act on Appraisal and Appraisers.

According to the police, from January last year to February this year, Shin Mo (39), the CEO of a real estate consulting firm known as the behind-the-scenes force of Villa King, and others are suspected of issuing appraisal reports in accordance with the 'up appraisal' requested for jeonse fraud. 'Up appraisal' is a term used to describe brokers inflating appraisal values for the purpose of jeonse fraud, commonly used in simultaneous no-capital gap investments where the tenant’s jeonse deposit is used to purchase a house without any equity.

Police investigations revealed that when the jeonse fraud group requested up appraisals from appraisal brokers, the brokers contacted appraisers through websites, social networking services (SNS), and acquaintances to demand desired appraisal amounts, which the appraisers accepted and issued appraisal reports accordingly. Appraisers who accurately matched the amounts requested by brokers gained a reputation among brokers and were frequently commissioned for appraisals. The police found that brokers received fees ranging from 1 million to 10 million KRW per case when they obtained appraisals at the amounts desired by the consulting operators. Appraisers received a percentage of the statutory appraisal fees as incentives for securing the contracts.

In particular, the police identified that some appraisers received money and entertainment from brokers or accepted so-called 'paybacks' as compensation for introducing appraisal cases. Additionally, despite personal circumstances such as childbirth preventing them from performing regular duties, some appraisers registered as members of appraisal corporations to receive salaries, engaged in unauthorized use and mediation of appraisal licenses, and had non-appraisers write the contents of appraisal reports. They also hired part-time workers to conduct on-site investigations, which are part of appraisal work.

The police also requested administrative sanctions from the Ministry of Land, Infrastructure and Transport and the Financial Supervisory Service against the appraisers and loan solicitors. They notified the Ministry of Land, Infrastructure and Transport, the relevant authority, of areas requiring legal amendments and system improvements, and applied for confiscation and recovery of illicit gains related to fees and gratuities received for work-related services.

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