Family 'Jeonse Fraud Ring' consisting of a married couple and relatives referred to prosecution… 19 billion won swindled through deposit 'Ponzi scheme' [Yonhap News File Photo]A 'family Jeonse (lump-sum housing lease) fraud ring' has been apprehended after building over a dozen multi-family houses and swindling approximately 19 billion won through a deposit-cycling scheme.

According to police and other sources on the 14th, the Seoul Gwanak Police Station has been investigating a Chinese national ringleader surnamed Hong, his wife, and their relatives since 2024.

As Hong is currently residing abroad, he has not been apprehended. The police have referred 16 individuals, including his wife (surnamed Lee) and other relatives, to the prosecution on charges including fraud.

Among them, Hong's wife, Lee, was sentenced to 10 years in prison in the first trial late last month.

Hong's group is accused of swindling approximately 19 billion won in deposits from a total of 128 victims between 2018 and 2023, after successively building 11 multi-family houses in areas such as Gwanak-gu, Seoul, using loans and tenant deposits to operate a rental business.

The group created a state of insolvency by engaging in a so-called "deposit-cycling scheme," where they used deposits from new tenants to pay back previous tenants.

A significant number of the victims who were unable to recover their deposits are young adults just starting their careers.

The police launched an investigation after receiving numerous complaints and accusations against the group starting in 2024, and arrested Lee early this year.

The relatives who were found to have aided the crime by lending their names to the couple were also referred to the prosecution.

It was revealed that even when the buildings reached a "hollow housing" (negative equity) state, where the residual value was insufficient to return the deposits, the group deceived tenants by falsely reporting the total amount of prior deposits.