‘Ghost units’ used to secure jeonse loans, deposits pocketed; fraud ring arrested over a scheme in the 2.6-billion-won range

[Financial News] A group suspected of obtaining bank loans for jeonse deposits by claiming that nonexistent “ghost units” existed in a multi-unit house, and then stealing tenants’ deposits as well, has been arrested by police.
Police said on the 2nd that Seoul Gwanak Police Station arrested 11 people suspected of fraud. Among them, the ringleader, identified as A, who directed the crimes and took the proceeds, and building manager B were taken into custody.
A is accused of defrauding a bank out of 368 million won in residential jeonse loans between March and July 2023 by falsifying contracts to make it appear that C, D and E had rented three units that existed only on paper.
Investigators found that C, D and E lent their names for the loans and applied for jeonse loans after registering their residence and completing the process to obtain an official fixed date. They had previously worked as brokerage assistants at a real estate office run by licensed real estate agent F.
Police believe the group obtained these “fraudulent loans” by exploiting the nature of multi-unit houses, where individual units are not distinguished in the property register. The group reportedly took advantage of the fact that community centers and financial institutions have difficulty verifying the existence of individual units based on documents alone.
A is also accused of stealing tenants’ deposits with B, who managed the building and its lease contracts, and landlord G.
They bought a multi-unit house in Sadang-dong, Dongjak District, Seoul, using a “no-capital gap investment” method, taking over bank loans and existing tenants’ deposits. From July 2021 to March 2024, they then entered into contracts with 17 tenants and are believed to have defrauded them of 2.29 billion won in deposits through methods including misrepresenting the property’s legal status.
Police arrested not only F but also four licensed real estate agents involved in the lease contracts for the property targeted in the scheme.
After receiving a report of losses from jeonse fraud, police investigated landlord G and B, who had led the lease contracts, and arrested B. Further investigation led to the arrest of ringleader A, and police plan to check whether more accomplices were involved.
A police official said, “To prevent losses from jeonse fraud, you need to check not only the amount of the mortgage recorded in the property register but also the building’s value and the actual total deposits held by senior tenants,” and advised, “Ask real estate agents or landlords for objective documentation to assess the actual collateral value. After drawing up a contract, it is also worth checking the ‘status of fixed-date issuance’ at the local community center to confirm the amount of deposits with priority.”
The official added, “Buildings with mortgages that are excessive relative to their value, or with large amounts of senior-ranking tenant deposits, carry a very high risk that the deposits will not be returned in full if the property goes to auction, so you should exercise particular caution before entering into a contract.”
[email protected] Park Sung-hyun Reporter