Gang Arrested for Swindling 2.7 Billion Won from Banks and Tenants with 'Ghost Units'

Swindled 2.3 billion won in deposits from 17 tenants
Also secured jeonse loans from banks using fake contracts

A group of people who created nonexistent “ghost units” to obtain jeonse loans from banks and swindled tenants out of about 2.7 billion won in security deposits has been apprehended by police.

The Gwanak Police Station in Seoul said on November 2 that it had arrested and detained the alleged ringleader, identified as A, and B, who was responsible for managing the building, on fraud charges. Nine alleged accomplices, including C, the landlord of the multi-family house, were booked without detention.

According to police, the group allegedly used a multi-family house in Sadang-dong, Dongjak-gu, Seoul, to defraud banks of money through fraudulent jeonse loans and swindle 17 tenants out of their lease deposits, totaling 2.658 billion won, from July 2021 to March 2024.

From March to July 2023, the group allegedly created three units that did not actually exist in the building and obtained 368 million won in jeonse loans from banks. They used fake lease agreements and presented D, E, and F, who had previously worked as assistant real estate agents, as fictitious tenants.

The group was also found to have swindled actual tenants out of their security deposits. A, along with B and landlord C, purchased the multi-family house in Sadang-dong on the condition that they assume the bank loans and the existing tenants' deposits. It was a so-called “no-money gap investment,” requiring almost no money of their own. They later signed lease agreements with 17 tenants and, by misrepresenting the building's legal status, allegedly swindled them out of 2.29 billion won in deposits.

The group exploited the characteristics of multi-family houses. Because individual units in such properties are not separately registered in the land registry, it can be difficult for community service centers or financial institutions to verify from documents alone whether a unit actually exists.

A police official urged caution, saying, “If a property has an excessive amount of mortgages relative to its value or a large amount of senior-priority deposits, there is a significant risk that tenants will not recover their deposits in full if the property goes to auction.”

This content was produced with the assistance of AI translation services.