Prosecutors Indict Gang for Defrauding 900 Million Won in Jeonse Fraud Without Detention

Police Investigation Halted, but Prosecution Takes Over Case for Supplementary Inquiry

[Asia Economy Reporter Choi Taewon] The prosecution has indicted a loan broker and a landlord accused of defrauding approximately 900 million KRW through jeonse loan fraud.

The Criminal Division 1 of the Seoul Western District Prosecutors' Office (Chief Prosecutor Kim Sanghyun) announced on the 5th that on December 29 last year, they filed non-custodial charges against loan broker Mr. A (57) and landlord Mr. B (47) for violating the Act on the Aggravated Punishment of Specific Economic Crimes.

They conspired to purchase newly built villas using the so-called 'no-capital gap investment' method, where the purchase balance is paid with jeonse deposit without their own capital. They are accused of defrauding about 900 million KRW in jeonse funds from commercial banks by creating false jeonse contracts.

Mr. A and Mr. B divided roles around May 2018 and defrauded 320 million KRW from commercial banks. Subsequently, they recruited additional conspirators posing as false landlords and tenants, and received an additional 584 million KRW in two installments from commercial banks. The prosecution estimates that the false tenant participated in the crime due to urgent financial needs.

According to the prosecution, the police initially suspended the investigation into the fraud case involving the false landlord. However, after the prosecution requested corrective measures, the case was transferred to them. Through supplementary investigations including account tracing, they uncovered additional charges against Mr. B and Mr. A's involvement in the crime, leading to their indictment.

A prosecution official stated, "They exploited the jeonse loan system for non-homeowners, which has strict screening only regarding the tenant's actual residence but is otherwise lenient."