In the event that the defendants did not pay a fine, the defendants shall be confined in the old house for the period calculated by converting the amount of 5,000,000 (O million) into one day.

To order the Defendants to pay an amount of money equivalent to each fine.

On December 5, 2003, Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”) acquired and operated land and factory facilities related to the waste incineration site in Seo-gu Incheon Metropolitan City ( Address 1 omitted) through an auction on December 5, 2003, sold on December 5, 2005 the waste incineration permit, real estate, facilities, and equipment to Nonindicted Co. 2 Co. 2 to KRW 14.3 billion (excluding value-added tax) and then moved the place of business to the Gyeonggi-si ( Address 2 omitted) on February 22, 2006, but was disposed of ex officio on June 30, 2006 (the “Defendant 8, 2006” stated in the indictment is a clerical error in the “Report on February 22, 2006”).

Defendant 2 demanded that Defendant 1, who was introduced through the employees of Nonindicted Company 1, pay the corporate tax of KRW 1,543,889,389 that will be imposed on Nonindicted Company 1 with respect to the sale of Nonindicted Company 1’s assets and KRW 3.22 billion in global income tax amount for the corporation funds that he used ( KRW 6.577 billion in 2005, KRW 2.660 million in 2006, KRW 260 million in 2006), and that Defendant 1, who was introduced through the employees of Nonindicted Company 1, paid the tax amount of KRW 1.5 billion in return for the request to substitute for the report on tax amount related to Nonindicted Company 1 to reduce the amount of tax to be imposed in the way of manipulating the book value, etc. Defendant 1, upon Defendant 2’s acceptance of Defendant 2’s request, provided that Defendant 1 undergoes the amount of tax to evade the disposal of assets by appropriating the book value in excess of the book value.

No person shall evade taxes by fraud or other improper means.

On March 22, 2006, the Defendants filed an electronic return of Nonindicted Company 1’s corporate tax through the National Tax Service on March 22, 2006 by requesting Nonindicted 3 tax accountants to return the book value (false book value) on the land, buildings, and other machinery owned by Nonindicted Company 1 in excess of the actual book value as follows, thereby underreporting the profits from the disposal of Nonindicted Company 1’s assets.

The book value of assets contained in the main sentence of this Article is 4,83,61,60,641, 70, 60, 601, 60, 816, 705, 740, 749, 740, 749, 740, 749, 740, 749, 740, 749, 740, 749, 740, 7969, 740, 740, 749, 740, 759, 740, 7969, 740, 740, 759, 740, 759, 740, 740, 759, 740, 740, 757, 709, 740, 7570, 740, 757

As a result, the Defendants conspired to include the book value of the assets of Nonindicted Company 1 in excess of the actual book value, and subsequently, to report under-reported profits from the disposal of the assets of Nonindicted Company 1, thereby evading corporate tax 1,543,889,389, instead of the corporate tax of KRW 35,294,641, which was imposed at a normal time, thereby evading corporate tax of Nonindicted Company 1 in 2005.

1. Some of the interrogation protocol of the Defendants’ prosecutor’s suspect (refinite, No. 2) (written statement by Defendant 2 to the effect that Defendant 1 paid KRW 1.5 billion to Defendant 1 on December 5, 2005 through April 2006 on the following grounds: (a) Defendant 1 transferred only the documents such as Nonindicted Company 1’s corporate office, employee identification, and account book; and (b) paid KRW 1.5 billion to Defendant 1)

1. Part of the witness’s statement in the second trial record (a statement to the effect that around March 10, 2006, Defendant 1 invested KRW 1.5 billion in the entertainment room of Nonindicted Company 1; around March 2006, Defendant 1 received the documents related to the return of Nonindicted Company 1’s corporate tax from Defendant 1 and gave it to the tax accountant located in Gwangju)

1. Among the third trial records, the statement of Nonindicted 4’s witness Nonindicted 4’s partial statement (around January 2006, the statement was made by introducing Defendant 1 to Defendant 2; a long time, Defendant 2 told Defendant 1 to give KRW 1.5 billion to Defendant 1 and to settle taxes, and the part mentioned Defendant 2’s statement is admissible as evidence in accordance with Article 316(1) of the Criminal Procedure Act)

1. Part of the witness’s statement in the fourth trial record (written statement to the effect that Defendant 2 used the funds of Nonindicted Company 1 at will without entering in the cash time check column)

1. The statement of Defendant 2’s witness of the fourth protocol of trial (a statement to the effect that from November 18, 2005 to March 14, 2006, Nonindicted Party 1 used the funds of KRW 9.234 billion of Nonindicted Party 1’s company without entering it in the account book of Nonindicted Party 1, and that Defendant 1 did not confirm that he had properly reported taxes after giving KRW 1.5 billion to Defendant 1)

1. In the fourth trial record, the statement to the effect that the witness was instructed to report the corporate tax in 2005 by Nonindicted Party 1 at the nearest place in Gwangju (the statement to the effect that Nonindicted Party 6 and the person operating the business on March 22, 2006 were instructed to report the corporate tax in 2005)

1. Statement of the witness Nonindicted 9 in the fourth protocol of the trial (written statement to the effect that the electronic return may be filed at any place, and that the return of corporate tax was filed on the basis of the relevant documents, such as the balance sheet received from the client at the request of Nonindicted 1 to return corporate tax in 2005)

1. Statement of the prosecutor’s protocol with respect to Nonindicted 4 (a statement that Defendant 2 demanded that Defendant 1 pay tax less amount, and the part that mentioned Defendant 2’s statement is admissible as evidence in accordance with Articles 312(4) and 316(1) of the Criminal Procedure Act)

1. Statement by the prosecutor about Non-Indicted 10

1. Return of tax base and amount of corporate tax, total standard balance sheet, standard income statement and supplementary schedules;

1. Reference materials, such as the tax calculation table, the balance sheet of Nonindicted Company 1 (the December 31, 2005), the income statement of Nonindicted Company 1 (the December 31, 2005), the income statement of Nonindicted Company 1 (the December 31, 2005), the statement of the disposal cost of Nonindicted Company 1 (the December 31, 2005), the statement of the disposal cost of Nonindicted Company 1 (the December 31, 2005), and the market calculation statement of Nonindicted Company 1 (the December 12, 2005)

1. Contracts on the acquisition of the business assets, the list of transferred assets, and the appraised amount of assets;

1. Statement of the approval of the acquisition price of Nonindicted Company 1’s business assets on November 4, 2009

1. Details of undue outflow of corporate funds by Defendant 2 of the actual inspection owner;

Defendants: Article 8(1)1 and (2) of the former Act on the Aggravated Punishment, etc. of Specific Crimes (Amended by Act No. 9919, Jan. 1, 2010); Article 9(1)3 of the former Punishment of Tax Evaders Act (Amended by Act No. 8138, Dec. 30, 2006); Article 30 of the Criminal Act

1. Discretionary mitigation;

Defendants: Articles 53, 55(1)3, and 55(1)6 of the Criminal Act (see, e.g., Supreme Court Decision 2006Da15488, Apr. 2

1. Detention in a workhouse;

Defendants: Articles 70 and 69(2) of the Criminal Act

[Violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) requires the concurrent imposition of fines of not less than two times but not more than five times the amount of evaded tax in the case of a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes. Therefore, the amount of fines of not less than 1,508,594,748 won, which is the amount of evaded tax, shall be set as 2 billion won within the scope of not more than 2.5 times the amount of evaded tax, which is 3,771,486,870 won, and the daily conversion amount of fines of not more than five million won in the case of a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax)

1. Order of provisional payment;

Defendants: Article 334(1) of the Criminal Procedure Act

Defendant 1 and his defense counsel asserted that Defendant 1 received from Defendant 2 the acquisition of Nonindicted Company 1 and received KRW 1.5 billion, and filed a corporate tax return in 2005 for the management of the company on the basis of the book received for the management of the company, and that there was no conspiracy between Defendant 2 and Defendant 2 to evade taxes or to manipulate books.

Meanwhile, Defendant 2 and his defense counsel asserted that Defendant 1 paid KRW 1.5 billion to Defendant 1 and evaded corporate tax equivalent to KRW 1.5 billion to Defendant 2 is not an interest to Defendant 2. As such, Defendant 2 did not agree with Defendant 1 regarding corporate tax evasion, and Defendant 1 paid KRW 1.5 billion to Defendant 1 upon delegation of corporate tax return in 2005 to Defendant 1, including tax and tax accountant expenses.

2. Determination

A. Defendant 2 met Defendant 1, who was employed by the tax accounting corporation as an employee in order to resolve tax issues, and thereafter, Defendant 1’s statement is consistent with the Defendants’ statement as to the fact of carrying KRW 1.5 billion on Defendant 1’s line. As seen earlier, Defendant 2 differs from one another’s assertion as to the reasons for carrying on and delivering KRW 1.5 billion to Defendant 1. Accordingly, the Defendants denied criminal facts on the method of tax evasion and the part of public offering on grounds of different reasons.

However, as seen below, in order to avoid the payment of the amount equivalent to KRW 1.5 billion corporate tax to be imposed on Nonindicted Company 1 and the amount equivalent to KRW 3.2 billion global income tax to be imposed on Defendant 2 to Defendant 1, Defendant 2 must be deemed to have been on the line line with Defendant 1, and the corporate tax of KRW 1,543,889,389 was not reduced to KRW 35,294,641 without any book manipulation such as criminal facts.

B. According to the results and records of the trial, the following facts can be acknowledged.

1) As a waste incineration company operated by Defendant 2, Nonindicted Co. 1 sold all the permission and basic property on December 5, 2005 to Nonindicted Co. 2, 2005, and subsequently discontinued its business.

2) Defendant 2 arbitrarily used KRW 9.2 billion out of the proceeds from the sale of Nonindicted Company 1’s property without entering it in the account book of Nonindicted Company 1, and when reporting profits from the sale of Nonindicted Company 1’s property in a normal manner, Defendant 2 was treated as the representative’s recognition prize for the said KRW 9.2 billion, and thus, Defendant 2 is bound to impose global income tax on Defendant 2.

3) Defendant 2 instructed Nonindicted 4, an employee, to inquire about the tax amount to be imposed in connection with the sale of the property of Nonindicted Company 1, even though Nonindicted 11 Tax Accountants who previously delegated the tax return of Nonindicted Company 1, and received the introduction of Defendant 1.

4) Defendant 2 paid KRW 1.5 billion to Defendant 1, upon the request to resolve the comprehensive income tax to be imposed on Nonindicted Company 1 in 2005 and the comprehensive income tax to be imposed on Defendant 2 to Defendant 1.

C. In addition, the record reveals the following.

1) A person who reported the corporate tax in 2005 of Nonindicted Company 1 is Defendant 1, and Defendant 1 entered the value of fixed assets at the time of December 31, 2004 in the financial statements of 2005 for Nonindicted Company 1, which was submitted by Defendant 1 to the police on September 28, 2011 (Evidence 2, Book 200 to 203) in the same manner as the legitimate book value. In light of this, Defendant 1 appears to have received a book stating the reasonable value from Defendant 2.

2) On December 5, 2005, Defendant 1’s assertion that Defendant 1 acquired the non-indicted 1 company from Defendant 2 is not reliable, and it is impossible to understand that Defendant 1 acquired the company as he received the KRW 1.5 billion from Defendant 2. However, Defendant 2 did not have any reason to take charge of the management of the corporation while paying a large amount of money to Defendant 1 employed by the tax accounting corporation. Ultimately, Defendant 1 and his defense counsel’s assertion that the acquisition of the non-indicted 1 company and the payment of KRW 1.5 billion was made during the period of management.

3) When Defendant 2 personally uses 9.2 billion won of the proceeds from the sale of the Nonindicted Company 1’s assets and files a normal tax return, he was in a situation to bear a large amount of comprehensive income tax, and Defendant 2 is a person who has operated the corporation for a long time, and such circumstance seems to have been well aware. The global income tax to be borne by Defendant 2 and the corporate tax of Nonindicted Company 1 would considerably exceed KRW 1.5 billion paid to Defendant 1, and if Defendant 2 pays 1.5 billion won to Defendant 1 and evades global income tax and corporate tax, it would be a big benefit to Defendant 2. Accordingly, Defendant 2 and his defense counsel’s assertion that there is no reason to procure for tax evasion is not acceptable.

4) Most of all, it is difficult to understand that Defendant 1, who had never been aware of prior to Defendant 2, asked for the payment of taxes by proxy and did not confirm whether to pay taxes even after the expiration of the reporting period by paying a large amount of KRW 1.5 billion. In addition, Defendant 2 stated that Defendant 2 paid KRW 1.5 billion to resolve global income tax and corporate tax at the time of interrogation of the suspect in the second place, but Defendant 2 stated that the total corporate tax and corporate tax costs were paid KRW 1.5 billion, without mentioning global income tax, in this court, and did not explain the reasons therefor. In light of the above, it is difficult to accept Defendant 2 and his defense counsel’s assertion that the total corporate tax and corporate tax costs were paid KRW 1.5 billion to Defendant 1.5 billion.

D. As such, Defendant 2’s evasion of the corporate tax amounting to KRW 1.5 billion imposed on Nonindicted Company 1 and the global income tax amounting to KRW 3.2 billion imposed on Defendant 2, Defendant 1, who received KRW 1.5 billion from Defendant 2, shall be deemed to have received KRW 1.5 billion from Defendant 2, and thus, Defendant 1 shall be deemed to have received tax evasion in collusion with each other to use it. Accordingly, the Defendants’ and defense

However, the circumstances that the Defendants were not subject to punishment for the same kind of crime shall be considered as favorable circumstances.

It is so decided as per Disposition for the above reasons.

Judges Ha-cheon (Presiding Judge)