151 Fake Tenants and Brokers... 14 Arrested
Crimes Committed Nationwide Over 7 Months Since October 2021
[Asia Economy Reporter Kim Hyun-jung] A total of 151 members of a gang who exploited loopholes in the government’s rental deposit loans for young people without housing by using fake tenants to receive loan support funds and pocketing a total of 8.3 billion KRW were arrested by the police.
According to Yonhap News on the 29th, the Metropolitan Investigation Unit of the Incheon Metropolitan Police Agency arrested 151 members of a loan fraud gang on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. Among them, the ringleader, a man in his 30s identified as A, and 14 others including loan brokers were detained. Of the remaining 137, 119, including fake tenants, were booked without detention on the same charges, and 18 licensed real estate agents were booked without detention on charges of administrative law violations.
Documents such as the lease agreement used by a group that exploited loopholes in the Jeonse loan system for young people without homes to embezzle 8.3 billion won in loans. [Photo by Yonhap News]
They are accused of embezzling and pocketing 8.3 billion KRW in loan funds from October 2021 to April 2022 in the Seoul metropolitan area and cities such as Gyeongju, Daegu, Daejeon, and Gwangju by exploiting loopholes in the government’s rental deposit loan system for young people without housing. The rental deposit loan for young people without housing is a system that anyone aged 19 to 33 can apply for, with a maximum loan amount of 100 million KRW.
The ringleader A planned the crime after noticing that commercial banks handling the rental deposit loans for young people without housing easily approved loans based only on document screening. First, he appointed 31 loan brokers as regional ringleaders, managers, and intermediaries nationwide, then recruited “capital-free gap investors” who wanted to sell houses through social networking services (SNS). Capital-free gap investors refer to homeowners who purchase houses using rental deposit money without their own capital.
Next, they purchased 83 houses for free from the capital-free gap investors on the condition of paying the rental deposit on their behalf, then prepared rental contracts using the names of pre-recruited fake tenants. The fake tenants applied for the rental deposit loans for young people without housing using these contracts and received the loan funds.
The loan money received was divided and pocketed according to each person’s role, and the licensed real estate agents who prepared the rental contracts received fees of 200,000 to 400,000 KRW per case. According to the police, A and others mostly admitted to the charges, but many of the licensed real estate agents denied the allegations.
The police believe they committed the crime with the intention of never repaying the loans from the start. The government has so far repaid 2.2 billion KRW on their behalf due to their crimes. A police official said, “They operated as a cell organization and committed crimes nationwide,” adding, “We will continue to crack down and severely punish rental fraud offenders.”
The police are expanding the investigation, believing there may be additional undisclosed crimes, and have notified the relevant banks of the gang’s criminal activities, suspending the payment of 4.2 billion KRW in scheduled rental deposit loans. Furthermore, to prevent additional crimes, banks and guarantee institutions have been requested to introduce procedures to verify lease contracts and to sanction licensed real estate agents for drafting rental contracts on behalf of others through related agencies.
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