Prosecutors Indict Executives of Housing Cooperative Agency for Defrauding Members of 9.1 Billion Won

[Asia Economy Reporter Song Seung-yoon] The Seoul Northern District Prosecutors' Office Tax Crime Criminal Division (Chief Prosecutor Han Tae-hwa) announced on the 5th that it has arrested and indicted five individuals, including A (56), the actual operator of the local housing association agency in Sangye 3 District, Nowon-gu, Seoul, and B (50), the representative, on charges of fraud and other offenses for deceiving local housing association members and embezzling tens of billions of won. Another five people, including the representative of another agency who acted as a channel for embezzling money, were also brought to trial without detention.

A and others are accused of falsely explaining to 246 association members from July 2017 to December last year that general sales had been confirmed, thereby receiving about 9.1 billion won.

This project site was originally not allowed to build apartments over 25 floors, and the land use consent rate was also at an early stage (1?22%), but they deceived the members by claiming that more than 66% had been secured and gathered people.

Among the embezzled money, A and others diverted about 4.6 billion won under the name of service fees and other expenses. It was revealed that they used this money for a luxurious lifestyle and to repay private loans.

They also committed similar fraudulent acts targeting low-income people without homes by changing regions. They used part of the money embezzled from Sangye 3 District association members as settlement money for failed local housing association projects conducted in other regions in the past or as funds for newly promoted local housing association projects in other areas.

The prosecution launched an investigation in September 2018, raided the offices of the agency and the promotion committee, and secured materials and transaction records. The chairman of the local housing association promotion committee was arrested and indicted along with A and his group on charges including breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

There are about 1,000 members who joined the Sangye 3 District local housing association, with the contract deposit alone amounting to 50 billion won.