Jeonse Scam Deceives 102 Young People and Newlyweds... 8.2 Billion Won Pocketed Through Gap Investment

Busan Police Arrest 4, Detain 1

Four members of a rental fraud ring, who stole more than 8 billion KRW in deposit money and caused distress to over 100 young professionals and newlywed couples, have been apprehended.

The Busan Metropolitan Police Agency (Chief Woo Cheolmun) announced on the 4th that they arrested four individuals who, aiming for profit through so-called "no-capital gap investment," took a total of 8,256 million KRW in deposits from 102 tenants. Among them, the ringleader, identified as Mr. A, has been detained.

According to the police, from October 2018 to November 2023, the group invested only 80 million KRW of their own money and used bank loans and tenants' deposit funds to sequentially purchase four multi-family buildings for a total of approximately 12.4 billion KRW, operating a rental business while using new deposits to pay off previous ones.

During this process, it was revealed that in many cases, they deceived tenants into believing they had purchased rental deposit insurance when they had not. Furthermore, despite being ineligible for insurance due to excessive loans and overlapping rental contracts, they submitted forged lease agreements with lower deposit amounts to HUG (Housing and Urban Guarantee Corporation) to fraudulently obtain coverage.

Real estate sales contract signed between the jeonse fraud gang and the tenant. [Image source=Busan Metropolitan Police Agency]

Lease contracts seized from the group involved in the jeonse fraud. [Image source=Busan Police Agency]

The majority of the victims were young professionals or newlywed couples who, lacking sufficient funds, secured their deposits through rental loans from financial institutions.

Authorities, including the police, advised tenants to always obtain rental deposit insurance before signing a lease contract and to check local sale and rental prices using the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system. They also recommended verifying the list of malicious landlords and tax delinquency status through the HUG Safe Jeonse app.

A representative from the Busan Metropolitan Police Agency stated, "We will continue to respond strictly and intensify crackdowns on serious crimes such as rental fraud, which undermine the foundation of ordinary people's lives."