Prosecutors Reinvestigate '1.4 Billion Empty Jeonse Fraud,' Arrest and Indict Suspects

View of apartments from Lotte World Tower Seoul Sky in Songpa-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Daehyun] A group involved in the so-called 'Kkangtong Jeonse' scam, which defrauded approximately 1.4 billion KRW from young adults starting their careers, has been brought to criminal trial.

On the 9th, the Suwon District Prosecutors' Office Criminal Division 1 (Chief Prosecutor Son Jinwook) announced that real estate agent A and gap investor B, who operated without capital, were arrested and indicted on charges of fraud, forgery and use of private documents, and obstruction of business. Additionally, A’s older brother, who lent his name, and B’s sister, who signed the Jeonse contract on behalf of others, were indicted without detention on the 6th.

According to the prosecution, A and others purchased multi-family housing through gap investment without capital and deceived inexperienced young adults in their 20s and 30s to embezzle their deposits.

Initially, the police decided not to prosecute, stating, "While it is acknowledged that landlords provided false information about the number of Jeonse units and the total deposit amount, it is difficult to establish a causal relationship with the signing of the Jeonse contracts."

However, after reviewing the records, the prosecution informed the victims about the objection filing system. Following the victims’ objections, the prosecution took over the case, re-investigated the suspects, and conducted a comprehensive supplementary investigation by analyzing bank account details, recorded conversations, and financial institution documents.

Through this, the prosecution concluded that A and others acquired multi-family housing under the condition of assuming financial institution loans without any personal capital and deceived tenants into signing 'Kkangtong Jeonse' contracts. It was also investigated that forged monthly lease contracts were submitted to financial institutions during the crime.

A Suwon District Prosecutors’ Office official stated, "We will do our best to maintain the prosecution so that the defendants, who embezzled the Jeonse deposits that victims had painstakingly saved and caused them to lose their livelihood foundation, receive sentences commensurate with their crimes. Investigations into accomplices and additional offenses will also continue."