Incheon Michuhol-gu 12.5 Billion Won Jeonse Fraud 'Construction King' Arrested and Indicted... 690 Households Auctioned

Organized Fraud by Building Owners and Real Estate Agents
Causing Jeonse Deposit Damage in 161 Apartment Units

A builder (nicknamed the "Construction King") and real estate agents accused of embezzling lease deposit money worth around 12 billion KRW in the Michuhol-gu area of Incheon have been brought to trial.

The Criminal Division 5 of the Incheon District Prosecutors' Office (Chief Prosecutor Park Seong-min) announced on the 15th that builder Mr. A (61) was arrested and indicted on charges including fraud and violation of the Act on Real Name Registration of Real Estate, while six accomplices including real estate agent Mr. B (46) were indicted without detention.

The prosecution also stated that among the suspects who were referred by the police without detention, three real estate agents employed by Mr. A were judged to have been heavily involved in the crime and to have committed serious offenses, and they are currently under investigation after being directly detained.

Mr. A and others are accused of embezzling 12.5 billion KRW in lease deposits from tenants for 161 apartments and villas in the Michuhol-gu area of Incheon from January to July last year.

The prosecution believes that Mr. A colluded with real estate agents to systematically commit lease fraud. Despite the possibility that the properties could be auctioned off due to worsening financial conditions such as overdue loan interest payments, they recklessly entered into lease contracts.

Investigations revealed that since 2009, Mr. A purchased land under the names of other people such as real estate agents and brokerage assistants, then built small-scale apartments and villas through his comprehensive construction company.

He increased his real estate holdings by constructing multi-family housing using lease deposits and mortgage loans, and is currently known to own a total of 2,700 units in Incheon and the Gyeonggi-do area.

For his rental business, Mr. A operated 5 to 7 real estate offices under the names of real estate agents and assigned them to exclusively handle brokerage of houses he owned.

He also organized the offices into teams such as brokerage, housing management, and planning/public affairs, paying salaries and performance bonuses to real estate agents belonging to the brokerage team based on contract conclusions.

During this process, the real estate agents concealed the fact that Mr. A was the actual owner of the houses, and from January last year, even though auctions had begun on several properties, they signed lease contracts without informing the tenants.

A prosecution official explained, "As of February this year, a total of 690 households have been auctioned off," adding, "The real estate agents reassured tenants by having them sign promissory notes stating that the deposit would be repaid on their behalf while concluding lease contracts."

He continued, "They neglected tenant protection and the fair duties of real estate agents, focusing solely on concluding lease contracts to raise funds for business expansion, resulting in many victims. This is an organized lease fraud crime committed by building owners and real estate agents, disrupting the order of real estate transactions. We will thoroughly maintain the prosecution to ensure punishment commensurate with the crime."