'No-Capital Gap Investment' 13.8 Billion Won Jeonse Fraud Gang Faces Trial

Two Rental Business Operators Arrested and Indicted

A group involved in a jeonse fraud scheme amounting to approximately 14 billion KRW from 155 victims using four one-room multi-family houses purchased through 'capital-free gap investment' has been brought to trial.

Seoul Southern District Prosecutors' Office, Yangcheon-gu, Seoul.
Photo by Daehyun Kim kdh@

On the 18th, the 5th Criminal Division of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jo Jae-cheol) announced that they have arrested and indicted two capital-free landlords in their 50s, Gu Mo and Byun Mo, on charges including fraud related to the jeonse fraud. Eight others, including the building sellers and name providers who conspired with them, were indicted without detention.

They are accused of embezzling 13.5 billion KRW in jeonse deposits and 300 million KRW in jeonse loan funds from 155 victims between February 2017 and October last year in Yeongdeungpo-gu, Geumcheon-gu, and Dongjak-gu, Seoul. They used the jeonse deposits received from tenants to cover the purchase price and engaged in so-called 'empty can jeonse' contracts, where the jeonse price exceeded the building's actual value.

They used the deposits received from victims to return deposits to existing tenants, but when funds became insufficient, they took out a 300 million KRW loan by presenting fictitious tenants. Additionally, the building owner who handed over the one-room hotels to the capital-free landlords was found to have recruited new tenants to recover the purchase price, gathering 2.3 billion KRW in deposits.

A prosecutor stated, "We will make every effort to maintain the prosecution to ensure punishment commensurate with the crime and prioritize victim protection, responding strictly to jeonse fraud and other crimes that harm the livelihood of the people."

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