"Bankruptcy Tomorrow" Sudden Blow... Large-Scale Jeonse Fraud in Dongtan (Comprehensive)

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Yu Mo (31, female), who lives in an officetel in Dongtan New Town, Hwaseong-si, Gyeonggi-do, received an absurd phone call from her landlord on the 6th. The officetel owner, Ji Mo (33, female), contacted her saying, "I am going bankrupt tomorrow due to tax arrears. It seems I won’t be able to return your deposit. I’m sorry." Yu’s deposit amounted to 173 million won. Unable to sleep due to her bewilderment, she found others in a public messenger chat room who had experienced similar situations. Yu said, "I am very angry and it’s outrageous that there are so many victims like me," adding, "I am currently exploring all options, including criminal charges."

◆ Expansion of Jeonse Fraud Damage in Dongtan Officetels = Police have launched an investigation after receiving reports that dozens of victims are unable to recover their jeonse deposits due to a landlord owning hundreds of officetels in Dongtan New Town going bankrupt. More victims claiming to have been defrauded by other landlords have also emerged, suggesting that jeonse fraud damage in the Dongtan New Town area is likely to expand.

According to the police on the 19th, the Hwaseong Dongtan Police Station in Gyeonggi Province began investigating after receiving a report the previous day that a landlord owning about 250 officetel units was refusing to return deposits, raising concerns about a collective jeonse fraud incident. A police official stated, "We started the investigation based on a victim’s report," and added, "We are currently verifying additional victims and the exact amount of damages." The reporter is said to have claimed that although the officetel lease contract had expired, they were unable to recover their deposit.

Currently, multiple posts expressing grievances have been posted online. The appeals mainly state that Park Mo, a landlord owning about 250 officetel units in Dongtan New Town, demanded the transfer of officetel ownership, citing difficulties in returning the jeonse deposits due to tax arrears. The officetels are currently in a reverse jeonse state, and tenants reportedly face losses ranging from 20 to 50 million won each if they accept the ownership transfer.

Besides the reports filed with the police, more individuals claiming to be victims of jeonse fraud in Dongtan New Town are emerging, indicating that the damage is expected to grow. A person identifying themselves as another victim, A, said, "I contracted with a landlord who owns about 40 units, but now face the risk of not recovering my jeonse deposit. Currently, victims defrauded by this landlord are gathering to prepare criminal charges."

Separately, the Southern Gyeonggi Provincial Police Agency is accelerating investigations related to jeonse fraud. On the same day, the agency announced that it had arrested five individuals involved in the so-called ‘Villa God’ case, who owned about 3,400 villas and officetels nationwide through ‘zero-capital gap investment’ schemes, and sent over 130 licensed real estate agents to prosecution without detention. Additionally, about 100 suspects related to the case have been identified and are under investigation.

◆ Concentrated Damage Among 20s and 30s... Opaque Price Disclosure = Amid the surge of jeonse fraud cases nationwide, it has been found that people in their 20s and 30s, who generally lack real estate contract experience, have become prime targets. Jeonse fraudsters exploited their relatively low capital and lack of information. According to a nationwide special crackdown on jeonse fraud conducted by the National Police Agency from July last year to March this year, out of 1,460 victims, 696 (47.7%) were young people in their 20s and 30s. They were followed by those in their 40s (222), 50s (167), and 60s (99). During the same period, the police arrested 2,141 people, detained 189, and the total damage amounted to 272.8 billion won.

The National Countermeasure Committee for Jeonse Fraud and Empty Jeonse Victims held a press conference in Michuhol-gu, Incheon, stating, "The lax system, which does not allow prior knowledge of artificially inflated prices or landlords’ tens of billions of won in arrears, has caused these results," and added, "The government, which bears clear responsibility for indiscriminate jeonse loans, blind guarantees, and poor guarantee insurance, must actively resolve the problem."

Experts agree that to prevent jeonse fraud, government agencies must conduct objective price evaluations and reduce information asymmetry. Jeong Byung-joo, representative lawyer at Law Office Naon, emphasized, "Jeonse fraud crimes occur due to opaque price information," and said, "A possible solution is for the government to assess and disclose prices when new buildings are constructed." Lee Eun-hyung, a research fellow at the Korea Institute of Construction Policy, said, "Young people with low economic power tend to flock to villas, which are cheaper than apartments, making them more vulnerable to crime," and added, "Measures to transparently disclose prices to resolve information asymmetry should be implemented as soon as possible."

There were also calls for enacting special laws for victim relief. Kim Nam-geun, a lawyer at Law Firm Weemin, argued regarding the government’s temporary suspension of auctions, "While auctions by the Korea Asset Management Corporation can be postponed for a considerable period, it seems difficult to delay court auctions," and insisted, "A special law for victim relief should be established within six months." He added, "Since individual legal disputes take a long time, one method could be for asset management corporations to collectively take over the landlord deposit return rights so that tenants can continue living."

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