"927 Victims, Damage Amounting to 240 Billion Won"…15-Year Prison Sentence Requested for 'Guri Jeonse Fraud' Mastermind

19 Accomplices Sentenced to 1-12 Years in Prison
Prosecutors: "Severe Punishment Needed Due to Large and Serious Damage"

The ringleader among 27 suspects in the so-called 'Guri Jeonse Fraud' case, who deceived tenants and embezzled a total of 240 billion won in Jeonse deposits, has been sentenced to 15 years in prison.

On the 12th, the Namyangju Branch of the Uijeongbu District Prosecutors' Office announced that it requested the court to sentence defendant Go (41), the ringleader of the Guri Jeonse fraud case and CEO of a real estate consulting firm, who was indicted on charges of fraud, to 15 years in prison.

On the afternoon of the 5th, the Daejeon Jeonse Fraud Victims Countermeasure Committee (Countermeasure Committee) and about 220 local victims held a street march in Dunsan-dong, Seo-gu, Daejeon, demanding the government acknowledge its negligence and provide compensation, while condemning the ruling party and Daejeon City.
[Photo by Yonhap News]

The prosecution explained the reason for the sentence request, stating, "There are 927 victims in this case, and the amount of damage exceeds 240 billion won. Due to the large scale and severity of the damage, strict punishment is necessary."

Additionally, the prosecution requested the court to sentence two executives of the company, who were also indicted and detained on the same charges, and four others including false lessors and intermediaries, to 7 to 12 years in prison. For 15 others, including company employees who were indicted without detention, false lessor intermediaries, and sales agents, the prosecution requested sentences ranging from 1 to 7 years in prison.

Seven licensed real estate agents who were indicted without detention for violating the Licensed Real Estate Agents Act by participating in this case were fined 5 million won each.

Acquired a total of 928 units through a no-capital gap investment method

From November 2020 to September last year, the suspects divided roles and purchased 928 officetels and villas in the Seoul metropolitan area, including 670 units in Seoul, 158 in Gyeonggi, and 100 in Incheon, using a 'no-capital gap investment' method, and then embezzled 243.4 billion won in Jeonse deposits, leading to their prosecution.

The prosecution judged that the defendants purchased houses solely with tenants' Jeonse deposits without investing any of their own capital, and despite the so-called 'empty Jeonse' structure where the house price was lower than the Jeonse deposit, making it impossible to return the deposit, they deceived the tenants.

Overview of the Guri Jeonse Fraud Case [Photo by Uijeongbu District Court Namyangju Branch]

In this process, sales agents, licensed real estate agents, false lessors, and intermediaries were mobilized.

Sales agents secured tenants by sending promotional messages to licensed real estate agents, including rebates, and the licensed real estate agents brokered Jeonse contracts while receiving 4 to 10 times the statutory brokerage fee, according to the investigation.

Moreover, as the number of houses increased, causing tax issues, Go and others continued their crimes by appointing false lessors through intermediaries, and the prosecution found that most of the criminal proceeds were squandered on cryptocurrency and stock investments, as well as entertainment expenses.

Go and other executives and employees of the real estate consulting firm denied the charges at the first trial held in July at the Namyangju Branch of the Uijeongbu District Court, presided over by Judge Choi Young-eun of Criminal Division 2, claiming there was no intent to defraud.

They argued that they merely took over contracts between building owners and tenants. Some claimed they were sales staff who only followed orders and thus were accessories, not accomplices.

The sentencing trial for these defendants will be held on the 12th of next month.

Jeonse fraud spreading nationwide including Incheon, Busan, and Daejeon

Victims of jeonse fraud and empty jeonse held a press conference condemning the government's ruling party's special law in front of the Presidential Office in Yongsan-gu, Seoul, on the morning of May 18, and performed a satire on policies that fail to protect tenants.
[Photo by Yonhap News]

Jeonse fraud has occurred nationwide, not only in Guri but also in Incheon, Busan, and Daejeon, with most victims being young people in their 20s and 30s.

According to the 'Special Act on Support for Jeonse Fraud Victims and Housing Stability' progress report submitted by the Ministry of Land, Infrastructure and Transport to the National Assembly on the 5th, the government recognized 9,109 out of 11,007 cases reviewed as victims during the six months since the special law was enacted.

By age group, those in their 30s were the largest at 4,423, followed by those in their 20s (2,130), 40s (1,489), 50s (655), 60s (295), and 70s (117).

Youth in their 20s and 30s accounted for 72.0% of the total. The majority of fraud types were no-capital gap speculation or simultaneous fraud types, accounting for 43.7%.

By housing type, multi-family houses accounted for 34.7%, officetels 24.8%, apartments and row houses 19.3%, and single-family and multi-household homes 12.3%.

Regarding the victims' residential areas, a significant number were in Seoul with 2,366 cases (26.0%), Gyeonggi with 1,867 cases (20.8%), and Incheon with 1,865 cases (20.5%), making the metropolitan area account for 66.9% of the total.

Outside the metropolitan area, cases were distributed in Busan with 1,149 (12.6%) and Daejeon with 752 (8.3%). Most of the deposit amounts were under 300 million won (96.9%).

As of the 30th of last month, support has been provided for 3,799 of the 9,109 victims. The government plans to establish a three-stage public rental support system tailored to demand by newly introducing Jeonse rental support.

In the first stage, existing houses will be purchased and rented to victims. If purchase is difficult, in the second stage, public institutions (LH) will sign Jeonse contracts individually with households and re-rent to victims. If residing in existing houses is difficult, in the final third stage, public rental housing secured nearby will be provided.

Especially for multi-household homes where bulk purchase is inevitable, the government is considering easing purchase requirements so that purchase can proceed with the consent of all victims, not just all tenants.

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