Gang accused of 4.1 billion won jeonse fraud that duped 33 tenants referred to Public Prosecution Office; used deposits to expand property holdings

[Financial News] A group accused of swindling approximately 4.1 billion won from 33 tenants by falsely assuring them there would be no problem returning their jeonse deposits has been referred to the Public Prosecution Office.
Police said on the 10th that Seoul Dongjak Police Station referred the chairman of a rental company, identified as A, his son and the company’s CEO, identified as B, a brokerage assistant, identified as C, and three licensed real estate agents to the Public Prosecution Office on the 6th on suspicion of fraud and other offenses.
Among them, B, who effectively ran the rental company, and C, who actually operated a real estate agency, were referred to the Public Prosecution Office in custody. The three licensed real estate agents were also accused of violating the Licensed Real Estate Agents Act, in addition to suspected complicity in the fraud.
They are accused of defrauding 33 tenants of approximately 4.1 billion won in deposits for four multi-unit residential buildings in Seoul’s Dongjak District between December 2020 and April 2025. Investigators found that during lease negotiations, they falsely told tenants that the buildings were worth several billion won and that senior deposit liabilities were low, so there would be no problem returning their deposits.
The rental company is believed to have built one building after another using loans and jeonse deposits, with virtually no equity of its own. In particular, it covered about 70% of the land purchase price with secured loans and financed about 70% of construction costs through bank loans disbursed in stages according to construction progress.
Once a building was completed, they settled construction costs and other expenses using jeonse deposits received from tenants. The remaining deposits were then used to buy land and for other expenses involved in building another property.
Investigators found that brokerage assistant C put three licensed real estate agents forward as so-called front men and handled brokerage operations and key decisions. C was also found to have handled all the leasing brokerage for the multi-unit residential buildings and received kickbacks exceeding the statutory brokerage fee for each contract.
Police plan to continue investigating to help victims recover, including checking for additional victims, tracing the flow of the fraud proceeds and securing concealed assets.
A police official urged tenants to exercise particular caution when signing a lease, saying, "When entering into a lease, you should not only check the amount of the mortgage registered in the property register, but also ask the licensed real estate agent or landlord for objective documentation showing the building’s value and the actual total deposits of senior tenants, so you can verify its actual collateral value." The official added, "If the amount of the registered mortgage or the senior tenants’ deposits is excessive relative to the building’s value, the risk of not getting your deposit back is very high."
[email protected] Park Sung-hyun Reporter