Recruiter in 2.9 Billion Won Rental Fraud Case Belatedly Brought to Trial... Criticism Over Inadequate Police Investigation

2.9 Billion Won Defrauded from 12 Tenants
Case Initially Focused on 'Nominal Landlord'
Criminal Facts Reconstructed at Prosecution Stage
Recruiter’s Role and Flow of Rebate Funds Uncovered

In a rental deposit fraud case involving so-called "zero-capital gap investment," where 2.9 billion won was defrauded from 12 tenants, the key accomplice known as the “recruiter” has been belatedly brought to trial. Although signs of complicity were identified at the police stage, critics say the overall structure of the rental fraud organization was clarified late due to prolonged delays in the related investigation.

Suwon District Prosecutors' Office. Photo by Hyunmin Kim kimhyun81@

According to The Asia Business Daily’s coverage on August 14, the Criminal Division 4 of the Suwon District Prosecutors' Office (Chief Prosecutor Son Ji-hye) indicted a man in his 30s, referred to as Mr. A, without detention on July 30 for fraud.

Mr. A is accused of participating in a so-called “simultaneous-type rental fraud” scheme, in which he swindled a total of 2.9 billion won in rental deposits from 12 tenants. This type of scheme involves signing rental contracts with tenants and immediately using the deposit to pay the purchase price of properties, effectively acquiring homes without any personal capital. The named landlord, who lacks the ability to return deposits, is used to inflict losses on tenants.

Investigations revealed that Mr. A recruited zero-capital gap investors while communicating with consulting agents who orchestrated the fraudulent operation. Specifically, from July 2020 to July 2021, Mr. A recruited Mr. B as a nominal landlord, who played the role of a zero-capital gap investor, and participated in defrauding 2.645 billion won in deposits from 11 tenants.

Additionally, in May 2021, Mr. A was also involved in recruiting another nominal landlord through Mr. B, defrauding an additional 255 million won from one tenant.

It has been found that at the police stage, Mr. A’s role as an accomplice was not properly investigated before the case was forwarded. In particular, although the police drafted an investigation report stating their intention to separately investigate suspected accomplices, they failed to confirm in detail whether Mr. A was involved.

As a result, the case was initially handled focusing on Mr. B, who acted as the nominal landlord, and it was only after the case reached the prosecution stage that the roles of the recruiter and the flow of rebate funds were uncovered.

After receiving the case, prosecutors reconstructed the criminal facts by reanalyzing victim reports, relevant court records, and account transaction details. Notably, they secured additional accounts used for rebate distribution and tracked the transaction history to further substantiate the evidence of Mr. A’s conspiracy and participation.

Prosecutors first indicted Mr. B and others without detention in May, and then separately investigated Mr. A, who had refused to appear, before bringing him to trial last month.

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