Rebate Received and Villa Ownership Transferred... Suspended Sentence for Capital-Free Gap Investor

A no-capital gap investor who received ownership of a villa from a real estate consulting firm without the capacity to return the lease deposit was sentenced to imprisonment with a suspended sentence.

On the 14th, Judge Seo Dong-won of the Criminal Division 6 at the Seoul Eastern District Court announced that A (31), who was tried on charges of fraud, was sentenced to one year in prison with a three-year suspension.

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A was indicted on charges of receiving ownership of a villa without financial capacity and embezzling the lease deposit from the jeonse tenant.

In 2021, A accepted a proposal from real estate consultant B to transfer the ownership of the villa under A’s name in exchange for a rebate worth approximately 700,000 won per case. B signed a jeonse contract with victim C for 205 million won, which included the seller’s desired sale price of 169 million won plus the rebate amount. Subsequently, A received ownership of the villa on the condition of being responsible for returning C’s lease deposit.

However, it was confirmed that A had neither the economic ability nor the intention to return the deposit. As a so-called no-capital gap investor, A had no steady income other than the commission earned from purchasing the villa. A planned to split the difference between the lease deposit received from C and the purchase price with the real estate consulting firm.

The court explained the sentencing rationale, stating, "The defendant denies the crime and has a prior criminal record of the same nature," but added, "Fortunately, it appears that the victim will be able to recover the full lease deposit."

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