(b) Violation of the Financial Investment Services and Capital Markets Act;

(c) Violation of the Door-to-Door Sales Act;

Defendant 11, 13, 16, 18 and public prosecutor (pock)

For senior citizens:

Law Firm Gyeongbuk, et al.

20, 22, 23, 26, 31 Compensation Orders

1. As to the Prosecutor’s Grounds of Appeal

A. Based on its stated reasoning, the lower court determined that there was no proof of each crime as to the violation of the Financial Investment Services and Capital Markets Act (hereinafter referred to as the "Capital Markets Act") due to some unfair trading among the facts charged against Defendant 1 and Defendant 2 and the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (hereinafter referred to as the "Special Economic Crimes Act"), and that there was no proof of each crime as to the violation of the Capital Markets Act due to unfair trading among the facts charged against the remaining Defendants except Defendant 1, Defendant 2, and Defendant 18 Co., Ltd. (hereinafter referred to as the "Defendant 18") and the violation of the Door-to-Door Sales, etc. Act against Defendant 7 (hereinafter referred to as the "Door Sales Act"), and acquitted Defendant 1.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on deception, joint principal liability, and additional collection under the Act on Special Cases Concerning the Confiscation and Restoration of Corruption Property, as otherwise alleged in the grounds of appeal, by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by using documents, etc. containing false description or indication as to material facts in relation to the sale and purchase of financial investment instruments and other transactions prohibited by Article 178(1)2 of the Capital Markets Act, or by misapprehending the legal doctrine on additional collection under Article 443(1) of the Capital Markets Act.

B. The assertion that voluntary fines not imposed concurrently constitute deviation from and abuse of discretionary authority constitutes an allegation of unfair sentencing. However, under Article 383 subparag. 4 of the Criminal Procedure Act, a prosecutor may not assert in the court below as the ground of appeal the grounds for appeal that there was an error of violation of the rules of evidence in finding facts premised on sentencing against the interests of the defendant (see, e.g., Supreme Court Decisions 94Do1705, Aug. 12, 1994; 2001Do5304, Dec. 27, 2001). The prosecutor appealed all of the judgment of the court below as to the acquittal portion. However, although the prosecutor appealed on the appeal and the appellate brief, the court below acquitted Defendant 1 of the violation of the Capital Markets Act due to sales of non-reported securities, ② Defendant 7 and Defendant 18 of the facts charged against the remaining Defendants, the grounds for appeal as to the violation of the Door-to-Door Sales Act is not indicated.

2. As to Defendant 1’s ground of appeal

A. Of the facts charged against Defendant 1, the lower court determined that Defendant 1’s shares of Defendant 18, who sold to the victims prior to the issuance of uniform stock certificates, constitute financial investment instruments, based on the following: (a) the violation of the Capital Markets Act due to unfair trading (excluding the part of innocence) with which Defendant 1 used fraudulent schemes for the purpose of trading stocks of Defendant 18, which are financial investment instruments; (b) Defendant 18 entered into a transfer agency contract with the Nonindicted Bank and issued a uniform stock certificate; and (c) the Defendant exchanged the same quantity of uniform stock certificates with respect to the certificates of stock custody issued to the purchaser when selling the shares of Defendant 18 before the issuance of uniform stock certificates.

Examining the relevant legal principles and evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the meaning of “financial investment instruments” under Article 3(1) of the Financial Investment Services and Capital Markets Act. In addition, the lower court did not err by misapprehending the legal doctrine on the meaning of “the benefit derived from a violation of Article 443(1) of the Financial Investment Services and Capital Markets Act”, contrary to what is alleged in the grounds of appeal, by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by exceeding the bounds of the principle of free evaluation of evidence, or by using documents, etc. with false description or indication as to “financial investment instruments” and “the benefit derived from a violation of Article 178(1)2 of the Financial Investment Services and Capital Markets Act.

B. As to Defendant 1’s violation of the Door-to-Door Sales Act stipulating that the Defendant operated a multi-level marketing organization with respect to the sales of stocks of Defendant 18, the lower court determined that: (a) payment of bonuses under the pretext of introduction to the existing salespersons who introduced them whenever a new salesperson is formed; and (b) payment of bonuses under the pretext of sales performance of all subordinate salespersons under its command should be made if a certain salesperson is promoted to a certain rank or higher; (c) payment of bonuses under the pretext of incentives for all subordinate salespersons under its command should be made; and (b) payment of bonuses under the premise that all the subordinate salespersons were introduced from the time of entry to the first salesperson; and (d) payment of bonuses under the premise that all the subordinate salespersons under the Act was naturally and naturally formed through a series of vertical divisions; and (e) payment of bonuses under the pretext of incentives paid to the president’s position should be made under the premise that all the subordinate salespersonss are linked to the first salesperson’s sales incentive under the condition that all the subordinate salespersonss are subordinate to the first salesperson.

Examining the relevant legal principles and evidence duly admitted, the above judgment below did not err by misapprehending the legal principles on the meaning of "multi-level marketing" under Article 2 subparagraph 5 of the Door-to-Door Sales Act, contrary to what is alleged in the grounds of appeal.

C. On the grounds stated in its reasoning, the lower court convicted Defendant 1 of the violation of the Specific Economic Crimes Act (Fraud) and the violation of the Capital Markets Act (excluding the part of innocence) due to sales of unreported securities. Examining the reasoning of the lower judgment in light of the relevant legal principles and evidence duly admitted, the lower court did not err by misapprehending the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on the relation between the violation of the Capital Markets Act due to deception, causation, fraud, and unfair trading in the crime of violating the Specific Economic Crimes Act (Fraud), the relation between the violation of the Capital Markets Act due to unfair trading, and the number of the crimes of violating the Specific Economic Crimes Act

D. Examining various circumstances that form the conditions for sentencing as indicated in the records, such as Defendant 1’s age, sex, and environment, relationship with the victim, motive, means, and consequence of each of the instant crimes, etc., the court below’s sentence of imprisonment with prison labor for 15 years and fine of 500 million won cannot be deemed significantly unfair, even in light of the circumstances asserted in the grounds of appeal.

3. On the grounds of appeal by Defendant 2, the lower court convicted Defendant 2 of the violation of the Capital Markets Act, the violation of the Specific Economic Crimes Act (Fraud), and the door-to-door Sales Act (excluding the part not guilty in the grounds of appeal) among the facts charged against Defendant 2 on the grounds as indicated in its reasoning. Examining the reasoning of the lower judgment in light of the relevant legal principles and evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the violation of the principle of free evaluation of evidence against logical and empirical rules, or the violation of the Capital Markets Act and the violation of the Act on the Specific Economic Crimes (Fraud), and the meaning of the "multilevel marketing" under Article 2 subparag. 5 of the Door-to-Door Sales Act, contrary to what is alleged in the grounds of appeal.

A. Violation of the Door-to-Door Sales Act

Based on its stated reasoning, the lower court convicted the Defendants of violating the Door-to-Door Sales Act (excluding the part not guilty in the reasoning) among the facts charged against the said Defendants. Examining the reasoning of the lower judgment in light of the relevant legal principles and evidence duly admitted, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on the meaning of “multi-level marketing” under Article 2 subparag. 5 of the Door-to-Door Sales Act, establishment

B. Defendant 9’s remaining grounds of appeal contain errors in the misapprehension of legal principles as to the establishment of joint principal offense in violation of the Door-to-Door Sales Act in the judgment of the court below, as alleged in the ground of appeal by Defendant 9, or in the judgment of the court below that the court below did not consider it as the object of judgment ex officio, and it does not constitute legitimate

C. According to Article 383 subparag. 4 of the Criminal Procedure Act, Defendant 11’s remaining grounds of appeal are allowed an appeal on the grounds of unfair sentencing only in cases where death penalty, life imprisonment, or imprisonment with or without prison labor for more than ten years is imposed. The assertion that Defendant 11’s punishment is too unreasonable is not a legitimate ground of appeal.

5. On the grounds of appeal by Defendant 18, the lower court convicted Defendant 18 of violation of the Capital Markets Act and the Door-to-Door Sales Act among the facts charged against Defendant 18 on the grounds stated in its reasoning. Examining the reasoning of the lower judgment in light of relevant legal principles and evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the establishment of the crime of violating the Capital Markets Act by failing to exhaust all necessary deliberations, contrary to what is alleged in the grounds of appeal.

6. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-in

Justices Min Il-young in charge

Justices Lee Jae-hwan