'Pan-Government Nationwide Special Crackdown on Jeonse Fraud' Interim Results
Ministry of Land, Infrastructure and Transport Requests Investigation of 970 People by Police Over 10 Months
Police Arrest 2,895 People... Prosecution and Police Establish Regional Hotlines
#. A sales and consulting agent Mr. A conspired with the building owner Mr. B, who newly constructed a villa in Seoul, to attract tenants and have them sign a jeonse contract with Mr. B at a high deposit in exchange for a certain commission. Subsequently, a 'front' landlord Mr. C purchased the entire building, making it difficult to return the deposit when the lease contract ended. In fact, numerous suspicious transactions were found in real estate transaction report data, such as Mr. C purchasing 15 units in one building on the same day or buying 8 houses at distant addresses.
◆Severe Damage in Gangseo-gu, Seoul and Among 2030 Generation... Ministry of Land, Infrastructure and Transport "Continued Cooperation in Investigation"
The nationwide special crackdown on jeonse fraud, which started on July 25 last year, has been ongoing for over 10 months. Ahead of its scheduled end on July 24, the Ministry of Land, Infrastructure and Transport announced on the 8th that it had selected 1,322 cases suspected of organized jeonse fraud by the end of May and requested investigations of 970 suspects and related persons by the police. Additionally, 316 cases of false price reporting were notified to the National Tax Service, and 1,164 cases of violations of the transaction reporting law were reported to local governments.
This is based on investigations and analyses of real estate transaction report data and damage consultation cases received by the Jeonse Damage Support Center. In particular, the Ministry explained that it extracted 2,091 cases suspected of jeonse fraud among villa, officetel, and low-priced apartment transactions reported from January 2020 to December 2022.
The region with the largest deposit damage scale in suspected jeonse fraud transactions was Gangseo-gu, Seoul (KRW 83.3 billion, 337 cases). This was followed by Hwaseong-si, Gyeonggi Province (KRW 23.8 billion, 176 cases), Bupyeong-gu, Incheon (KRW 21.1 billion, 128 cases), and Michuhol-gu, Incheon (KRW 20.5 billion, 159 cases). The total damage amount was estimated at KRW 244.5 billion.
The number of tenants who received damage consultations was 558, of whom the majority, 61.3%, were young people in their 20s and 30s. Breaking it down further, those in their 30s accounted for 46.6% (260 people), those in their 20s 14.7% (82 people), and those in their 40s 12.0% (67 people).
Among the 970 suspects and related persons in suspected jeonse fraud, real estate agents and brokerage assistants were the largest group with 414 people (42.7%). Landlords accounted for 264 people (27.2%), building owners 161 people (16.6%), and sales and consulting agents 72 people (7.4%).
Minister of Land, Infrastructure and Transport Won Hee-ryong said, "In the second half of the year, we will expand the analysis target to about 40,000 cases and continue cooperation to assist investigations," adding, "We will share information such as the start of investigations and victim status from the prosecution and police to ensure that the Jeonse Fraud Damage Support Committee can promptly decide on victims." He also mentioned the establishment of a jeonse fraud risk detection system using artificial intelligence (AI) and social network analysis techniques.
A banner appealing for help regarding a jeonse fraud is hung on the window of an apartment in Michuhol-gu, Incheon. / Photo by Yonhap News
◆Police Crack Down on 31 Organizations... Prosecution "Seeking Maximum Legal Penalties"
During the same period, the National Police Agency’s National Investigation Headquarters announced that it had arrested a total of 2,895 people and detained 288 based on investigation requests from the Ministry of Land, Infrastructure and Transport. The total number of cases arrested was 986.
Notably, they achieved results by dismantling 10 no-capital gap investment fraud organizations owning over 10,300 units nationwide and 21 fraud organizations that embezzled about KRW 78.8 billion in jeonse loan funds through false jeonse contracts. In cooperation with the prosecution, they applied Article 114 of the Criminal Act on 'criminal organizations and groups' for the first time to 41 members of 6 organizations.
By crime type, the number of arrests was highest for false guarantees and insurance at 1,471, followed by no-capital gap investment at 514, and illegal brokerage activities at 486.
The damage status confirmed 2,996 victims and a damage amount of KRW 459.9 billion. By age, those in their 20s and 30s accounted for 54.4%, and by housing type, multi-family houses (villas) and officetels accounted for 83.4%. The damage amount per person was under KRW 200 million in 80.2% of cases.
Meanwhile, the Supreme Prosecutors’ Office has assigned 71 dedicated prosecutors for jeonse fraud across 54 prosecution offices nationwide and is cooperating with the Ministry of Land, Infrastructure and Transport and the National Police Agency. Since January this year, a 'Prosecution-Police Regional Hotline' has been established in seven major metropolitan areas and provinces.
The prosecution stated, "We prioritize the recovery of victims and actively maintain prosecutions to ensure that appropriate sentences, including the maximum legal penalties through concurrent offenses, are imposed."
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