[Economic Crime 24 Hours] The Villa King Appears Again... Made Tens of Billions with 123 Office-tels in the Seoul Metropolitan Area

Gyeonggi Nambu Provincial Police Agency Anti-Corruption Economic Crime Investigation Unit 2, Team 4
Jeonse Fraud Grim Reaper...Transferred Amount Exceeds 100 Billion Won

Even late at night, the lights never go out at Team 4, Investigation Division 2, Anti-Corruption and Economic Crime Investigation Unit, Southern Gyeonggi Provincial Police Agency (hereinafter Investigation Team). To the jeonse fraudsters, the Investigation Team is like the Grim Reaper.

Recently, all major jeonse fraud cases that occurred in the metropolitan area have been on this team’s investigation radar. The Southern Gyeonggi Provincial Police Agency, together with the Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit, handles the largest number of jeonse fraud crimes nationwide. The Investigation Team is responsible for investigating cases that have attracted social attention. Representative cases include the Jeonse fraud by the Jeong family in Suwon, the capital-free gap investment jeonse fraud in the Dongtan area of Hwaseong, and the ‘Villa God’ incident. The total damage from these three cases alone amounts to a staggering 170 billion KRW. The number of victims has exceeded 1,000.

The Investigation Team, consisting of six investigators including Team Leader Kang Yong-gyu, is working tirelessly day and night to eradicate jeonse fraudsters. As jeonse fraud began to surge, the team focused on establishing legal grounds to apply criminal charges of ‘fraud’ for landlords’ failure to pay jeonse deposits. Of course, since tenants with remaining lease periods often did not want to pursue cases or file complaints and did not claim damages during police investigations, persuading them was challenging. Team Leader Kang said, “It was heartbreaking to hear that many young people suffered from jeonse fraud,” adding, “The entire team is running around in all directions to recover the victims’ losses.”

Recently, the Investigation Team apprehended a group that extorted billions of KRW from dozens of victims across the metropolitan area using a capital-free gap investment method and handed them over to the prosecution.

The method of crime is the so-called capital-free gap investment. Taking advantage of the reverse jeonse situation where the jeonse price is higher than the housing sale price, they purchased about 40 officetels in Gangseo and Mapo, Seoul; about 60 in Hanam, Suwon, and Hwaseong, Gyeonggi Province; and about 10 in Seo-gu, Incheon. In this process, they acquired ownership of 123 officetels without spending a single won.

They meticulously followed a crime plan, selecting only real estate where ‘simultaneous transactions’ were possible, allowing them to pay the purchase price with the jeonse deposit while immediately receiving cash from the seller. Upon purchasing the officetels, they signed lease contracts with tenants at prices 10 to 15 million KRW higher than the sale price. This was the so-called ‘empty can jeonse’ scheme.

From September 2021 to December 2022, they embezzled more than 5.5 billion KRW from over 50 tenants using this method. Investigations revealed that victims were unable to recover lease deposits ranging from 60 million KRW to 200 million KRW per person.

Their crimes came to light when victims who could not recover their deposits appealed to the Ministry of Land, Infrastructure and Transport. In May last year, after the Ministry identified the crimes, it requested an investigation from the National Police Agency’s Criminal Investigation Headquarters, and the case was assigned to Team 4, Investigation Division 2, Anti-Corruption and Economic Crime Investigation Unit, Southern Gyeonggi Provincial Police Agency. After months of investigation, the team arrested three suspects, including the landlord, and obtained arrest warrants on February 23 of this year.

All three suspects were detained and transferred to the prosecution on February 27. The Suwon District Prosecutors’ Office Criminal Division 5 (Chief Prosecutor Lee Jeong-hwa) indicted them on the 14th of this month. However, as reports of tenant damages continue and considering that the suspects owned 123 officetels, the scale of damage may increase.

Team Leader Kang said, “The number of victims continues to rise, and during the investigation, we have identified and are tracking potential additional accomplices,” urging, “To avoid falling victim to jeonse fraud, it is necessary to check the landlord’s total housing ownership and any outstanding arrears after signing the contract.”

Ten Commandments to Prevent Jeonse Fraud

1. Check surrounding sale and jeonse prices

2. Use the standard residential lease contract

3. Verify the amount of debt by checking prior claims such as mortgages and jeonse rights

4. Check for landlord’s tax arrears

5. Confirm priority deposits

6. Verify the status of fixed-date registration

7. Review resident registration

8. Report the lease contract

9. Submit resident registration and fixed-date registration applications

10. Subscribe to jeonse deposit return guarantee

(Provided by the Ministry of Land, Infrastructure and Transport)