A person in their 50s received a significant prison sentence for failing to return rental deposits amounting to 6 billion KRW after engaging in real estate investments through “gap investment,” which involves buying multiple properties using rental deposits instead of personal capital.
Judge Kim Ji-yeon from the Gwangju District Court sentenced Mr. A (53) to 10 years in prison on charges of fraud, among other offenses. Additionally, eight accomplices involved in the rental scam received sentences of either six months in prison or fines ranging from 3 million to 9 million KRW.
Mr. A was accused of owning 64 apartments and other properties under someone else’s name in 2017, from which he illegally collected a total of approximately 6.83 billion KRW in rental deposits from 64 individuals.
Despite debts amounting to between 2 billion and 3 billion KRW, which left him in a state of credit delinquency, Mr. A continued to acquire properties through gap investment using the rental deposits he received. He was unable to repay the deposits when they were due and thus committed what is known as a rental scam by using the rental deposits to cover interest payments on loans he had taken out against the properties.
The other accomplices were charged with either providing their names for property purchases or signing false rental agreements to secure rental deposit loans in the course of Mr. A’s gap investment scheme.
Judge Kim noted that the case was particularly egregious due to Mr. A’s reckless acquisition of property and subsequent expansion of his rental business, which led to his inability to return the hefty rental deposits, and that a harsh sentence was unavoidable considering the victims had not been fully compensated for their losses.