The Busan Court complex [Busan District Court]
The Busan Court complex [Busan District Court]

The criminal sixth division of Busan District Court, presided over by Chief Judge Im Seong-cheol, sentenced a former senior Busan city official to 10 years in prison Friday on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and forging private documents.

The defendant, identified only as A, is in his 70s and previously served as chairman of a public institution under the Busan city government and as deputy district mayor of a local municipality. He was indicted on charges of purchasing hundreds of officetels through zero-capital gap investment and defrauding tenants and financial institutions of about 11 billion won ($7.49 million) in jeonse deposits and loan proceeds.

According to the court, A purchased properties worth approximately 35.8 billion won between August 2016 and March 2020, registering them under his own name and those of his spouse, son and a company he operated. The actual purchase price he paid was only about 2.4 billion won; the remainder was covered by assuming existing mortgage debt and obligations to return lease deposits. Using this method, A rented out approximately 300 officetel units.

The court said that acquiring large numbers of properties through gap investment generates almost no rental income while costs — including acquisition taxes, brokerage fees and building management expenses — continue to accumulate, and hundreds of millions to billions of won in deposits must be returned each year, making the risk of deposit non-repayment far greater than in ordinary lease arrangements.

"Jeonse fraud is a crime that gravely threatens the residential stability of tenants and undermines public trust in lease transactions — the lost deposits represent virtually the entire life savings of the victims," the court said in explaining the sentence. "The defendant's greed for easy money caused enormous harm to many victims, and the culpability is extremely grave, as he also forged and used lease contracts to obtain additional mortgage loans."

Victims of the jeonse fraud pushed back against the ruling Friday, saying they had expected a heavier sentence given that the maximum statutory penalty is 15 years and that the crimes included forgery of lease contracts. "We expected a heavier sentence, but it was limited to 10 years," they said.


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