19 billion won jeonse scam run by family using deposit 'money-go-round' lands suspects in court

A family operating as a "jeonse" (lump-sum deposit) scam ring has been handed over to prosecutors for allegedly defrauding over 120 tenants of approximately 19 billion won ($14 million). The group is accused of using a "money-go-round" scheme, where they reinvested tenants' deposits to fund new rental properties without sufficient capital. The alleged ringleader, identified as a Chinese national named Hong, is currently overseas, while his wife, Lee, has already been sentenced to 10 years in prison in a first-instance trial. The family members and relatives involved in the scam allegedly built 11 multi-family homes in Seoul's Gwanak district between 2018 and 2023. The deposits collected from tenants were reportedly used not only for land acquisition and construction but also to repay deposits to other tenants, a practice known as "bojeunggeum dollyeo makgi" or "deposit money go-round."

Many of the victims were reportedly young adults starting their careers, making them particularly vulnerable to such large-scale financial fraud. The investigation revealed that the scam operated by leveraging the jeonse system, a unique South Korean housing rental arrangement where tenants pay a large lump sum deposit, often equivalent to a significant portion of the property's value, in exchange for lower monthly rent. The accused exploited this system by acquiring properties with minimal personal investment, relying heavily on the deposits collected from new tenants to cover the obligations to previous ones.