A Jeonse Scam That Hurt Ordinary People Ends in Suspended Sentence [Scammers]

[The Financial News]"I will pay all acquisition taxes and other taxes, so please find a buyer who can lend their name to purchase real estate through a 'no-capital gap investment.'"Kim, a 30-year-old real estate assistant broker, made that request to Kang, 36, after being asked to handle the sale of a multi-family house in Sinjeong-dong, Yangcheon-gu, Seoul. His plan was to proceed with the sales contract and the jeonse contract at the same time. He intended to use a so-called 'front landlord' who would appear on paper only, not a buyer purchasing the home with their own money. He would then pay the sale price with the tenant's jeonse deposit and pocket the difference. It was an underwater jeonse structure, where the deposit exceeded the actual sale price.
Kang, who accepted Kim's proposal, connected Lee as the nominal owner. Lee had no meaningful assets or income and only planned to use the money he would receive for lending his name. In other words, he had neither the intent nor the ability to return the deposit if housing prices fell later or if no new tenant could be found.
The victim, Jo, unaware of these circumstances, signed a jeonse lease for the multi-family house at a real estate office in Sinjeong-dong on March 4, 2021. The contract ran for two years, from April 16 that year to April 16, 2023, and the deposit was 250 million won. On the day the contract was signed, Jo sent 12.5 million won to the account of the former owner of the home, then transferred an additional 237.5 million won on the day the lease term began.
Through this process, Kim and his group pocketed 20 million won, the difference between the jeonse deposit and the sale price of 230 million won. Kim was also found to have purchased real estate under other people's names and handled various taxes on their behalf in other cases as well.
According to the legal community on the 3rd, Judge Kim Beom-jin of Criminal Division 10, Single-Member Panel at the Seoul Southern District Court sentenced Kim to one year in prison on fraud charges. Kang, who was indicted on the same charges, received an eight-month prison term, suspended for two years.
The court said, "The amount obtained through fraud was not small, and the defendant did not reach a settlement with the victim." It added, "The defendants have no prior convictions for similar crimes. We also considered their respective roles, ages, and motives in the offense."
The court also stated, "Considering that Kim is supporting minor children and to give him an opportunity to make restitution, he will not be taken into custody in the courtroom."
psh@fnnews.com Park Seong-hyeon Reporter