Six Members of a Gang Indicted for 89.9 Billion Won Jeonse Fraud Using 'No-Capital Gap Investment' Scheme

A group accused of embezzling 89.9 billion won in jeonse deposits from over 400 tenants through a 'no-capital gap investment' scheme has been brought to trial.

Seoul Central District Prosecutors' Office, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The Criminal Division 8 of the Seoul Central District Prosecutors' Office (Chief Prosecutor Koo Tae-yeon) announced on the 9th that they have arrested and indicted three people, including Yeon Mo (38), the head of A Real Estate Agency, and three others, including Kim Mo (43), the head of Company B, on charges of organizing a criminal group and fraud.

According to the prosecution, Yeon and two others are accused of embezzling rental deposit guarantees worth approximately 20.5 billion won from 99 tenants between June 2021 and December 2022. It was investigated that they charged fees exceeding the legal commission, assigned brokerage tasks to brokerage assistants instead of licensed real estate agents, and prevented employees from informing tenants that it was a no-capital gap investment scheme.

Yeon and his associates operated branches of Company A in Guro-gu, Seoul, Bucheon, Gyeonggi Province, and Incheon, dividing positions and roles such as team leader, manager, and section chief, and disseminated various instructions necessary for the crimes through group chat rooms. The prosecution believes they organized a 'criminal group' capable of repeating offenses by holding performance competitions, giving rewards, and paying bonuses, and thus applied charges of organizing, joining, and engaging in criminal group activities.

Kim and two others are accused of embezzling 69.4 billion won in jeonse deposits from 346 people between March 2016 and January 2022. They are understood to have established Company B with the intent to commit jeonse fraud and operated multiple subordinate organizations, including real estate consulting firms, licensed real estate agencies, and design companies in Mapo-gu and Gangseo-gu, Seoul.

In particular, Kim was designated as a 'high-risk multi-home debtor under intensive management' (blacklist) by the Housing and Urban Guarantee Corporation (HUG), making it difficult to obtain guarantee insurance and recruit tenants. As a result, from April 2019, he continued the crimes by finding straw men to act as nominal owners.

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