20-Somethings Defrauding Internet Banks of Hundreds of Millions Using Fake Jeonse Contracts

Exploiting Loopholes in Non-Face-to-Face Loan Methods
Chuncheon District Court Sentences 2 Years Imprisonment for Fraud Charges

Two people in their 20s who created false real estate lease contracts to fraudulently obtain hundreds of millions of won in jeonse deposit loans from internet banks such as K-Bank and KakaoBank have been punished.

On the 2nd, Yonhap News reported that Kim Taek-seong, presiding judge of the Criminal Division 2 at Chuncheon District Court, sentenced A (27), who was indicted on charges of fraud, to two years in prison. The court also sentenced B (23), who was tried together on charges of fraud and violation of the Resident Registration Act, to one year and six months in prison with a three-year probation and ordered probation.

They were prosecuted on charges of recruiting homeowners and loan applicants to falsely act as lessors and lessees from March to May 2022, creating fake jeonse contracts at real estate agencies in Seoul, Ansan in Gyeonggi Province, and Chuncheon in Gangwon Province, and extorting hundreds of millions of won in loans from internet banks such as K-Bank and KakaoBank.

Chuncheon District Court Building Exterior

A and others created a false real estate jeonse contract stating "jeonse deposit 150 million won and monthly rent 700,000 won," deceiving KakaoBank to receive and pocket a jeonse loan of 100 million won. B is also charged with falsely registering a move-in on the Government 24 website in May 2022 based on a falsely created jeonse contract to obtain a jeonse deposit loan. Using this method, A received 285 million won in three installments, and B received 300 million won in three installments, which they shared with accomplices. Investigations revealed that they exploited a loophole in the youth jeonse deposit loan system of internet financial institutions, which processes related documents non-face-to-face and disburses loans after a formal review.

The court explained, "A committed the crime during the recidivism period for similar offenses," and "considering the considerable amount defrauded and the fact that a significant portion of the damage has not yet been recovered, the sentence was determined."

Meanwhile, similar crimes continue to occur. On April 30, the Gimpo Police in Gyeonggi Province arrested and sent to prosecution three people, including C, a man in his 20s who was the ringleader, on charges of organizing, joining, and participating in a criminal organization and fraud. Additionally, the police have non-custodially indicted and sent 27 others responsible for recruiting tenants, jeonse loans, and money laundering on charges of fraud and others.

They are accused of submitting false lease contracts to internet financial institutions 21 times from April 2022 to February last year to fraudulently obtain a total of 2.1 billion won in jeonse deposit loans. C and others received the jeonse deposit from financial institutions paid to villa landlords, then canceled the lease contracts to get the deposits back. It was found that they used all the loans that had to be repaid to the financial institutions after contract cancellations for personal purposes.