'Gang Sentenced to Prison in First Trial for Tens of Billions Loaned Through False Jeonse Contracts'

A group that exploited loopholes in the Youth Jeon-Wolse (monthly rent) support system to obtain tens of billions of won in loans from banks through false contracts was sentenced to prison in the first trial.

According to the legal community on the 21st, the 11th Criminal Division of the Seoul Western District Court (Chief Judge Bae Seong-jung) sentenced A (29), the mastermind charged with fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, to six years in prison on the 14th. Key accomplices B (22) and C (33) were sentenced to five years and six months and three years in prison, respectively.

Seven others who were tried as false loan tenants received fines ranging from 5 million to 7 million won, while three who recruited and introduced false tenants were sentenced to three to three and a half years in prison.

The court explained the sentencing by stating, "The social harm is very significant as the crime not only caused damage to financial institutions but also led to a contraction of the Jeonse deposit loan and guarantee system, potentially harming national housing stability. The recruitment of false landlords and tenants, the application for and receipt of Jeonse deposit loans, and the distribution of funds were carried out in an organized and planned manner, reflecting the serious nature of the crime."

A and B targeted the fact that the government-supported loan product, ‘Youth Jeon-Wolse Deposit Loan,’ allowed easy loans through non-face-to-face document screening as of January last year. They recruited false landlords and tenants and embezzled loan funds from banks through false Jeonse contracts.

The Youth Jeon-Wolse Deposit Loan is a product that, with a guarantee from the Korea Housing Finance Corporation, provides up to 100 million won at a low interest rate lower than the market rate without special collateral to young households aged 19 to 34 with no home ownership and no income, earning an annual income of 70 million won or less, through commercial banks.