LH Employee Arrested for Buying 43 Houses Using Insider Information...150 Billion KRW Profit
Speculation After Knowing Redevelopment Plans in Advance...House Prices Rose from 9.2 Billion to 24.4 Billion KRW
[Asia Economy Reporter Park Hyun-joo] A Korea Land and Housing Corporation (LH) employee was arrested by the police for speculating using insider information related to redevelopment in Seongnam City, Gyeonggi Province. He purchased 43 properties in the area and earned a profit of about 15 billion KRW.
On the 7th, the Special Investigation Unit for Real Estate Speculation Crimes of the Gyeonggi Southern Provincial Police Agency (led by Captain Song Byung-il) announced that three people, including LH employee A and two real estate agents, were arrested on charges of violating the Act on the Prevention of Corruption and the Establishment and Operation of the Anti-Corruption and Civil Rights Commission.
At the time of the crime, A was working at the LH Seongnam Regeneration Project Team, which was in charge of the redevelopment project in Seongnam City. He leaked insider information and, together with two real estate agents including his acquaintance B, engaged in speculative activities.
A and others are suspected of using insider information that Sujin 1-dong and Sinheung 1-dong areas in Seongnam City were included in the redevelopment project by LH and Seongnam City. From 2016 until early last year, before the redevelopment plan was publicly announced, they purchased 43 multi-family houses and officetels in the area for about 9.2 billion KRW. In December last year, the area was designated as the Sinheung-Suji redevelopment maintenance zone, and the prices of the houses purchased by A and others have now risen to about 24.4 billion KRW.
The police have filed charges against a total of 12 people, including A’s LH colleagues and acquaintances, who are believed to have participated in the crime. Among them, A and others with serious charges were arrested the day before. The police also requested the prosecution to apply for pre-indictment seizure preservation of 24.4 billion KRW, corresponding to the current market value of the houses purchased by A and others. Pre-indictment seizure preservation is a court order that prevents the suspect from disposing of illegal profits before a final verdict is reached.
Currently, A and others are known to deny the charges.
Additionally, the police are continuing their investigation after confirming another speculation case involving LH employee C, who was arrested for purchasing land worth about 2.5 billion KRW in the planned development area of Noonsadong, Gwangmyeong City, in April. It was found that C, while working at the LH Jeonbuk Regional Headquarters in 2015, used insider information to buy a golf practice range at a low price and earned more than 10 billion KRW in capital gains and about 100 million KRW in annual operating profits.
At that time, C was in charge of establishing and implementing the land readjustment plan for the urban development project in the southwestern area of Jeonju. He knew in advance that a public parking lot, theme park, and bridge would be built around the golf practice range facility in the Hyochon district and prepared to purchase the practice range facility. He, along with two LH colleagues and one relative, created nominee corporations under their family names and won the sole bid for the practice range facility at 97 million KRW, only 5% of the appraised value, citing the fact that the property had been passed over.
Then, C combined a loan of 3.3 billion KRW and land worth about 1.5 billion KRW that he had purchased in advance within the development district to acquire the practice range site for about 4.9 billion KRW. He directly managed the "luxury project" in the Hyochon district and developed the area around the practice range site. As a result, the value of the golf practice range is now estimated to be about 16 billion KRW.
The police arrested three more people, including two LH colleagues who purchased the practice range under nominee names and C’s relative, and applied for pre-indictment seizure preservation on the practice range facility and site.
A police official stated, "The LH employees arrested this time hired real estate experts and formed corporations to engage in speculation. We will strictly investigate all individuals suspected of real estate speculation regardless of their status and rank, and we will definitely recover the profits obtained through speculation."
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