30 Tenants' Deposits of 4.6 Billion Won Swindled in 'Kkangtong Jeonse'... Daegu Police Arrest 4 for Ponzi Scheme

One Arrested and Three Booked for Squandering Living Expenses

Deceiving Deposit During Conversion from Monthly Rent to Jeonse

On the 17th, the Daegu Southern Police Station arrested a man in his 50s, identified as A, on charges of fraud for allegedly swindling approximately 4.6 billion KRW in deposits from 30 tenants after renting out so-called ‘empty-can jeonse’ properties. Additionally, two licensed real estate agents and three acquaintances of A were booked without detention on charges including violations of the Licensed Real Estate Agent Act and fraud.

According to the police, A is suspected of operating in a manner of ‘zero-capital gap investment’ by purchasing five villa buildings in the Nam-gu and Dalseo-gu areas of Daegu from around October 2018 to December 2019. He allegedly used the deposits received from tenants to cover loan interest, taxes, living expenses, and other costs, effectively running a scheme of rolling over tenant deposits.

Daegu Police Agency.

A exploited the fact that tenants could only verify the status of prior-ranking deposits with the landlord’s consent before signing a lease by switching existing monthly rent contracts to jeonse contracts. He deceived victims by falsely disclosing the status of prior-ranking deposits and reportedly did not enter into contracts with tenants who requested verification of these deposits.

Following the amendment of the Housing Lease Protection Act in March, landlords are now required to provide tenants with information such as the date of granting the prior-ranking fixed date, lease details including rent and deposit, and tax payment certificates under the National Tax Collection Act and Local Tax Collection Act when concluding lease contracts.

The Intelligence Team of the Daegu Southern Police Station received a complaint in May from victims who had not been refunded their deposits and launched an investigation. Through examining A’s real estate holdings, they identified an additional 29 victims and secured key evidence to prove the charges. After apprehending the suspects, the investigation will be expanded to determine whether other real estate agents were involved in A’s criminal activities.

The Daegu Police Agency conducted a ‘Special Crackdown on Jeonse Fraud’ over 14 months from July last year to September this year, resulting in the prosecution of a total of 217 individuals (16 detained). The types of illegal activities uncovered were illegal brokerage and appraisal by 102 people (47%), false guarantee insurance by 72 people (33.2%), and false disclosure of rights relations by 20 people (9.2%), in that order.

The Daegu police stated that they will intensify the special crackdown until the end of this year, focusing investigative resources on malicious fraud crimes such as jeonse fraud that prey on ordinary citizens, and will strictly punish not only the actual perpetrators but also those behind the scenes.

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