[1] The method of determining whether a manager had an intent to commit a breach of trust or an intent to obtain unlawful gains with respect to management judgment

[2] Whether the so-called “exchange” constitutes a “credit extension exceeding the limit to an individual borrower” subject to prohibition and punishment under the Mutual Savings Banks Act (negative in principle), and whether the same applies to a case where a loan actually takes place due to such a transfer of funds (negative) / Whether such a legal principle likewise applies to a “large shareholder credit extension” (affirmative)

[3] Whether a “credit extension to a major shareholder, etc.” prohibited under Article 37(1) of the Mutual Savings Banks Act should be determined on the basis of the person to whom the loan actually belongs (affirmative)

[4] Where a crime of occupational breach of trust is established due to an insolvent loan, the scope of damages (=total amount of loans)

[5] Where multiple occupational breach of trust constitutes a single comprehensive crime

[6] The meaning of "illegal acquisition intent" in the crime of occupational embezzlement and the method of proving such intent

[7] In a case where the court's request for delivery to a public office, etc. constitutes important evidence which could support the defendant's innocence or at least show considerable possibility of different judge's conviction or acquittal, but refuses the defendant's request for inspection, designation or court's request without justifiable grounds, measures to be taken by the court

[1] Articles 35(2) and 356 of the Criminal Act / [2] Articles 2 subparag. 6 and 12(1) of the Mutual Savings Banks Act, Articles 37(1), 39(2)3 (see current Article 39(1)3 and 4), and 39(4)6 (see current Article 39(5)6) of the former Mutual Savings Banks Act / [3] Article 2 subparag. 6 of the Mutual Savings Banks Act, Article 37(1) and 12(1) of the Mutual Savings Banks Act, Article 37(1) of the former Mutual Savings Banks Act (Amended by Act No. 12100, Aug. 13, 2013); Articles 37(2) and 39(2)3 (see current Article 39(1)3 and 4 of the Mutual Savings Banks Act); Article 53(2) of the Criminal Procedure Act / [36(2) and 57(3) of the Criminal Act

[1] Supreme Court Decision 2009Do1464 Decided October 27, 201 (Gong2011Ha, 2483) Supreme Court Decision 201Do15052 Decided August 30, 201 / [2] Supreme Court Decision 2001Do2189 Decided June 29, 201 (Gong2001Ha, 1810), Supreme Court Decision 2012Do2087 decided June 28, 201 (Gong2012Ha, 1376) / [3] Supreme Court Decision 2008Do2084 Decided June 25, 2009 (Gong209Do1252, March 24, 2014) / [3] Supreme Court Decision 2008Do20147 decided June 27, 2012

Defendant

Defendant

Law Firm Macheon et al.

Seoul High Court Decision 2013No640 decided December 27, 2013

The appeal is dismissed.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to loans related to the golf course business of Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”)

A. As to the assertion that the act of breach of trust does not constitute an act of breach of trust and intention cannot be acknowledged

In the crime of occupational breach of trust, an intentional act of occupational breach of trust is established by combining the perception that a person who administers another’s business causes property damage to the principal and that such damage or loss is in breach of one’s own duty. Therefore, in determining whether a manager intended to obtain property and an intentional acquisition of illegal gains in relation to a management judgment, the intent of occupational breach of trust shall not be held solely on the ground that (i) the person was negligent in discharging liability or neglecting his/her duty merely on the ground that he/she committed an intentional act without such awareness; (ii) an intentional act should not be held in light of the circumstances and motive leading up to the management judgment in question; (iii) details of the business subject to determination; (iv) the economic situation of the company in question; and (iv) the probability of incurring loss and acquisition of profits; and (iv) an intentional act is recognized as either an intentional act or an intentional act under a trust relationship with the principal, or an act under a trust relationship with the principal, as a matter of course, without considering the specific circumstances, such as the content and nature of the duty to handle; and (iv).

The lower court determined that the Defendant, the representative director of Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2”) was carried out for the purpose of acquiring funds from May 28, 2008 to June 30, 201, taking into account the following facts: (a) Nonindicted Co. 1, a real borrower, extended KRW 380 billion over 57 times in the name of the real borrower, including Nonindicted Co. 3 (hereinafter “Nonindicted Co. 3”), and did not recover KRW 16895,3930,000 as of June 30, 201; (b) the Defendant was unable to obtain KRW 1,6895,3930,00 from Nonindicted Co. 1 to Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2”); (c) Nonindicted Co. 1’s act of having Nonindicted Co. 1 use as acquisition funds, etc. for acquisition funds, etc.; and (d) the Defendant, the actual borrower, without considering whether the Defendant’s act of lending and lending was in breach of trust or security purposes.

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine as to whether the act of breach of trust and the intent of breach of trust

B. As to the assertion that there was no risk of damages

In full view of the circumstances stated in its reasoning, the lower court determined that the same damage was inflicted on Nonindicted Company 1 and the borrower as the amount of Nonindicted Company 2’s decision.

Examining the reasoning of the judgment below in light of the evidence duly admitted, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of the legal principle as to damages in breach of trust or any necessary deliberation, or in violation of the principle of free evaluation of evidence

C. As to the assertion that the crime of violation of the Mutual Savings Banks Act is not established due to the extension of credit to large shareholders and the extension of credit to individual borrowers.

The so-called substitution, which performs an existing obligation by providing a new loan only formally without receiving funds, constitutes a separate loan, except in extenuating circumstances, but is merely merely an extension of the maturity of the existing obligation, and thus does not constitute “credit extension exceeding the limit to an individual borrower” which is subject to prohibition and punishment under the Mutual Savings Banks Act. However, the foregoing legal doctrine likewise applies to “credit extension to a major shareholder”, rather than in cases where a loan actually has been made due to the actual transfer of funds (see Supreme Court Decision 2012Do2087, Jun. 28, 2012, etc.).

In addition, Article 37(1) of the Mutual Savings Banks Act prohibits a person who has a special relationship with a mutual savings bank, such as a major shareholder, from extending credit. Article 2 subparag. 6 of the Mutual Savings Banks Act provides that "credit extension" means payment, loans, payment guarantee, purchase of securities in the nature of financial support, and other direct and indirect transactions of a mutual savings bank, which involve credit risk in financial transactions, as prescribed by Presidential Decree. In such cases, credit extension on one's own account regardless of in whose name it is named shall be deemed a credit extension on one's own account." Thus, whether a credit extension to a major shareholder, etc. constitutes a credit extension should be determined on the basis of a person whose loan is actually attributed (see Supreme Court Decision 2012Do12582,

The lower court, on the grounds indicated in its reasoning, acknowledged that the Defendant violated the relevant provisions of the Mutual Savings Banks Act by granting loans to Nonindicted Co. 4, May 28, 2008 through June 30, 201, in the name of 25 borrowed money, including Nonindicted Co. 3, etc., 57 times in the name of 25 borrowed money from Nonindicted Co. 3, etc., to its large shareholders, and by granting loans to Nonindicted Co. 4, etc. from September 25, 2008 to June 30, 201, during the said 57-time loans, in excess of the limit on individual borrowers.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the violation of

D. As to the assertion on the amount of profit in the crime of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) (hereinafter "Special Economic Crimes Act").

Where a crime of occupational breach of trust is established due to an insolvent loan, only the amount loaned in excess of the value of the collateral or the amount actually impossible to recover is not deemed as the amount of damage, and the total amount of the loan, which is likely to cause the impossibility of exercising property rights or to cause damage, shall be deemed as the amount of damage (see Supreme Court Decision 2000Do28, Mar. 24, 200, etc.).

Examining the reasoning of the judgment below in light of the aforementioned legal principles and evidence duly admitted, it is just to determine that the court below, on the basis of the calculation of the amount of damages and the amount of profit generated by the defendant's act, constituted a crime of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) as stated in its holding. There is no error in the misapprehension of legal principles as to the amount of

E. As to the assertion that the crime of breach of trust is not an inclusive crime

Even if multiple occupational breach of trust is committed, if the legal interest of damage is a single and the attitude of crime is the same, and if such multiple breach of trust can be seen as a series of acts based on a single criminal intent, such multiple breach of trust constitutes a single crime (see Supreme Court Decision 2004Do810, Jul. 9, 2004, etc.).

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court is justifiable to have applied Article 3 (1) 1 of the Special Economic Crimes Act by deeming that lending of the amount as indicated in its reasoning to Nonindicted Company 1 operated by the Defendant from May 28, 2008 to June 30, 201, in the name of Nonindicted Company 3, etc. 25, including Nonindicted Company 3, constitutes an inclusive crime of occupational breach of trust, and the lower court did not err by misapprehending the legal doctrine on the blanket crime, contrary to what is alleged in the grounds of appeal.

2. As to the crime of breach of trust in relation to the purchase of land for a golf course

The lower court, based on its evidence, ordered Nonindicted Co. 2 to enter into and purchase a sales contract of 251,020 square meters of the instant golf course site to Nonindicted Co. 5’s management support team leader Nonindicted Co. 6, and ordered Nonindicted Co. 2 to promptly dispose of KRW 5.1 billion by entering into a contract, and ordered Nonindicted Co. 6, who confirmed the above order, to enter into a sales contract with Nonindicted Co. 7 with Nonindicted Co. 1 and an intermediate payment of KRW 700 million. The lower court determined that: (a) Nonindicted Co. 6 was not the owner on the register; and (b) Nonindicted Co. 7, which became the seller of the sales contract (hereinafter “Nonindicted Co. 7”); and (c) Nonindicted Co. 1 and Nonindicted Co. 2’s trust registration for the said site was completed for the purpose of the sale contract to the seller of the said site; and (d) the Defendant did not have to enter into a sales contract with Nonindicted Co. 1 and Nonindicted Co. 5 regarding the sale price for the said site more than 700 billion won.

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the establishment of breach of trust and the

3. As to the crime of breach of trust in relation to the lease of the Seocho Branch of Nonindicted Company 2

According to its evidence, the lower court determined that, with respect to the “△△ building” owned and managed by the Defendant to Nonindicted 2 in Seocho-gu Seoul ( Address omitted), which had been actually owned and managed by the Defendant under a title trust with Nonindicted 8, the terms and conditions of the contract, such as setting the deposit amount at 12.5 billion won, without examining and examining the validity of the lease agreement between Nonindicted 2 and 8, should be determined on its own, so that the lease agreement was concluded in accordance with its instructions, and the former term of the lease on May 13, 2008 remains two years and five months, without considering the feasibility study and examination thereof, it was difficult for the Defendant to conclude a contract to return the deposit amount at KRW 10 billion to the said Nonindicted 2, the board of directors of Nonindicted 2, who did not take any measures to secure the return of the deposit amount at KRW 50 billion, and thus, it was difficult for the Defendant to find the risk of returning the deposit amount at KRW 600 million to the entire site of the building.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on whether to recognize the intent of breach of

4. As to the violation of the Sticking Control Act

The court below rejected the defendant's assertion that "Seonghoho", which the defendant was on board at the time, could not escape from the root year to a coastal fishing vessel, as well as that the coast guard leased by the coast guard and did not have a key to walk at the city or to go to China, making it impossible to go close to an area other than the Republic of Korea, and thus, it constitutes "where it is impossible to bring about a result due to the mistake in the enforcement means" as referred to in Article 27 of the Criminal Act, the court below acknowledged the facts as stated in its decision after considering the evidence duly adopted, and found the facts as stated in its decision, even though the defendant was arrested by the police officers belonging to the Korea Coast Guard who discovered the smuggling attempt in advance, resulting in the arrest of the police officers belonging to the Korea Coast Guard, thereby making it impossible to bring about a smuggling as a result

Examining the reasoning of the lower judgment in light of the relevant legal principles and evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on impossible or impossible attempts under Article 27 of the Criminal Act.

5. As to the embezzlement of art works owned by Nonindicted Company 2, Nonindicted Company 9 (hereinafter “Nonindicted Company 9”), and Nonindicted Company 10 (hereinafter “Nonindicted Company 10”)

A. As to the assertion that the intention of unlawful acquisition cannot be recognized

The lower court, on the grounds indicated in its reasoning, determined that the Defendant’s offering of art works owned by Nonindicted Company 2, Nonindicted Company 9, and Nonindicted Company 10 as a security for an individual’s obligation constituted embezzlement as indicated in its reasoning.

Examining the reasoning of the lower judgment in light of the relevant legal principles and duly admitted evidence, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the intent of embezzlement

B. As to the assertion that the calculation of the amount of profit of the embezzlement of art works owned by Nonindicted Company 9 is illegal

The lower court presumed that the Defendant’s act of offering 3 points of art works owned by Nonindicted Company 9, which the Defendant had been under custody, as a security for his own obligation, constitutes embezzlement, and determined that the amount of profit earned by the Defendant’s embezzlement of art works owned by Nonindicted Company 9 is KRW 2,100,000,000,000 in value of the said art works within the limit of KRW 14.5 billion, as the secured claim amount, and the Defendant jointly and severally guaranteed the obligation to return the investment amount of KRW 14.5 billion and interest to one capital of Nonindicted Company 2, together with other joint and several suretys, offered other art works as security along with the three points of the said art works owned by Nonindicted Company 9, and the other joint and several guarantors offered the said shares of Nonindicted Company 2 as security. The lower court held that the amount of profit earned by the Defendant by embezzlement of the art works owned by Nonindicted Company 9 is KRW 2,1310,000,00,000,00 won.

Examining the reasoning of the judgment below in light of the evidence duly admitted, the above determination by the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the calculation of the amount of embezzlement

The Supreme Court precedents cited in the grounds of appeal are inappropriate to be invoked in the instant case, since they differ from the instant case.

6. As to embezzlement of sales proceeds of secured art works by One Capital

In the crime of occupational embezzlement, the intent of unlawful acquisition refers to the intention of disposal of another person’s property, which is in violation of his/her duties and kept for the purpose of seeking the benefit of himself/herself or a third party, such as that of his/her own property. This means, where the defendant denies it, which belongs to the intention of internal deliberation, the fact constituting such subjective element is bound to be proven by means of proving indirect facts or circumstantial facts that are relevant to the nature of the object (see, e.g., Supreme Court Decision 2011Do6457, Sept. 8, 2011).

The court below held that the representative director of Nonindicted Co. 11 (hereinafter “Nonindicted Co. 11”) sold Nonindicted Co. 12’s “Nonindicted Co. 13”, which was offered as a security for Nonindicted Co. 2’s debt against one capital flight, based on the following reasons: (a) the Defendant, Nonindicted Co. 11, and Nonindicted Co. 12, and one capital were disposed of the said art goods and deposited the sales proceeds into the account designated by one Capital Capital; and (b) the Defendant agreed to cover the principal and interest of the investment of one Capital; (c) the Defendant received a cashier’s check equivalent to KRW 70 million, the sales proceeds directly from Nonindicted Co. 12, and used the payment of personal debt, and had the remainder of KRW 200 million before the Defendant was detained, and thus, it can be recognized that the Defendant had the intention of unlawful acquisition concerning the whole KRW 700 million against the Defendant.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the intent to acquire unlawful acquisition

7. As to the voluntary termination of secured art works by Nonindicted Company 2

The lower court determined that the crime of occupational breach of trust is established by comprehensively taking into account the following circumstances: (a) in a case where a financial institution has a provision that established or has established the standards, such as the degree of acquisition of collateral related to a loan on its own and the method of calculating the effective collateral price, and where there exists an established practice, it is based on the empirical judgment that there would be no problem in the recovery of claims only if it meets such standards; and (b) the act of arbitrarily cancelling the existing loan security for another loan and using it for another loan is also contrary to the principle of capital adequacy and loss; and (c) in so doing, the Defendant’s arbitrary termination of security for existing loan, thereby failing to secure sufficient collateral under the “Guidelines for Acquisition

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on intentional or unlawful acquisition or by failing to exhaust all necessary deliberations.

8. As to the remaining loans in breach of trust

The court below acknowledged the establishment of the crime of breach of trust of each loan in its holding on the grounds of various circumstances as stated in its holding, such as that each loan was executed without providing adequate collateral or taking reasonable measures for recovery of claims, and in the case of an insolvent loan, the total amount of the loan should be deemed damage.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on intentional act and amount of damages in breach of trust, by exceeding the bounds of the principle

9. As to loans to Nonindicted Co. 13 (hereinafter “Nonindicted Co. 13”) and Nonindicted Co. 14 (hereinafter “Nonindicted Co. 14”) and the extension of credit to the large shareholders related to loans from December 2011 to April 2012

The lower court determined as follows: (a) on March 26, 2010, under the understanding of Nonindicted Company 15, the representative director of Nonindicted Company 13, the Defendant borrowed KRW 9 billion from Nonindicted Company 13 to Nonindicted Company 2; (b) used the Defendant; (c) the Defendant established Nonindicted Company 14 in order to make investments in Nonindicted Company 16, a household manufacturing and distributing company; and (d) received KRW 23 billion from Nonindicted Company 2 in the name of Nonindicted Company 14 on December 31, 2010; and (c) the Defendant used the loan from Nonindicted Company 13 to enable the Defendant to use part of the loan from Nonindicted Company 13; and (d) whether the loan constitutes a person who actually obtained a loan from Nonindicted Company 17 to April 2012 and did not actually belong to the Defendant’s own economic motive or use of the loan from Nonindicted Company 2 as part of the loan from the borrower; and (d) whether the loan constitutes a person who actually belongs to the Defendant’s major shareholder’s loan or its own profits.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the violation of the Mutual Savings Banks Act

10. As to the excess of the holding limit of securities

The lower court held that the holding of Nonindicted Co. 18’s shares through the special purpose corporation should be assessed to the same extent as the investment by Nonindicted Co. 2 was made, on the ground that the provisions governing the management of mutual savings banks and mutual savings banks restrict the purchase and holding of shares of the same company in excess of 20/100 of their equity capital to the mutual savings banks, on the ground that the mutual savings banks prevent any situation arising from the insolvency or the decline in stock prices of invested companies, and thus, in determining the excess of the holding limit of securities, the mutual savings banks should acquire the shares of Nonindicted Co. 18’s shares on their own account regardless of their titles

Examining the reasoning of the lower judgment in light of the evidence duly admitted and relevant legal principles, the lower court’s determination is just and acceptable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on mutual savings banks.

11. As to the submission of a funding flow chart

A court’s refusal of a request for perusal, designation, or delivery of documents requested under Article 272(1) of the Criminal Procedure Act, without justifiable grounds, by a defendant or his/her defense counsel, even though the documents may support the defendant’s innocence or at least correspond to important evidence highly likely to have different convictions against the judge’s convictions or innocences, is serious infringement upon the defendant’s right to prompt and fair trial and the right to counsel’s assistance. Therefore, in such cases, if the court that requested delivery of documents finds the contents of the relevant documents to the extent possible and it is highly probable to affect the judgment of innocences or innocences if documents are submitted, the facts charged should not be deemed proven without reasonable doubt (see, e.g., Supreme Court Decision 2012Do1284, May 24, 2012).

The court below rejected the defendant's assertion that the Financial Supervisory Service or the investigative agency is refusing to submit a "financial flow," which prepared and kept a "financial flow," by investigating the place of use of the funds related to the crime of breach of trust and embezzlement of this case, and thus, even if the defendant could not disclose the place of use of the funds related to the crime of breach of trust and embezzlement of this case, the disadvantage caused by the failure to submit the funds of this case should be borne by the prosecutor. The above "financial flow level" does not constitute important evidence which could be different from the judge's conviction and innocence, and thus, rejected the defendant's above assertion.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s aforementioned determination is just and acceptable. In so determining, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on substitution, etc., or by

12. Conclusion

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

Justices Yang Chang-soo (Presiding Justice)