2016 Highly 738 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation), special

Violation of the Punishment, etc. of Specific Economic Crimes Act (Embezzlement)

A

Public trial (prosecution, public trial)

Law Firm B

Attorney in charge C

January 20, 2017

A defendant shall be punished by imprisonment for three years.

Of the facts charged in this case, the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes is acquitted.

Criminal facts

1. Status of the defendant;

The defendant, as the largest shareholder and representative director of D Co., Ltd. (hereinafter referred to as D) for the purpose of real estate rental business, received approximately KRW 32.2 billion rental deposit from the F Apartment lessee, a rental house E located in the city of netcheon-si owned by D, and was in the position of being kept in custody for D, and was a director of G Co., Ltd. (hereinafter referred to as "G") of food manufacturing chain company (hereinafter referred to as "G"), and was in charge of all the affairs

2. Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;

On March 22, 2013, the Defendant withdrawn KRW 5 million from D’s office in the name of Gwangju Bank account in the name of the victim D in order to use the funds for gambling in the name of the Defendant, and then embezzled KRW 6,417,853,765 on July 11, 2012 to July 13, 2016, including the withdrawal of the company funds through the account in the name of the Defendant from Gangwonland as shown in the attached Table of Crimes (1) from July 11, 2012 to July 13, 2016, using them for gambling funds in Gangwonland, J casino, K casino, etc., or for the Defendant’s daily living expenses, taxes, and the repayment of gambling debts in the said casino.

Summary of Evidence

1. Partial statement of the defendant;

1. Each prosecutor's protocol of suspect examination of the accused (including each L/he's protocol of suspect examination of each prosecutor's office 8-10);

1. Each prosecutor's statement of M, N, L,0, P, and Q;

1. Each statement prepared by R, M, S and L;

1. An investigation report (report attached to data on suspected operation of a company), an investigation report (report attached to data on suspected operation of a company), an investigation report (report attached to audit report), an investigation report [Report attached to data related to a suspected person], an investigation report (report attached to data on suspected and suspected person), an investigation report (report attached to data related to a corporation), an investigation report, an investigation report (report on the results of tracking of funds), an investigation report (T and J account analysis), an investigation report [financial status of G], an investigation report (report on withdrawal of funds), an investigation report (report on withdrawal of funds), an investigation report [Attachment of a sales contract of rental house (F apartment), an investigation report (date of preparation of a contract for lending and borrowing of money), an investigation report (report on the results of execution of a search and seizure warrant: Office of the KU office and its residence), an investigation report [report on the results of execution of the investigation report], a statement on the results of the investigation (report on the results of execution of the investigation report related to the investigation report], a copy of the investigation report related to the shareholders' rights attached to the company;

1. 각 법인등기부등본, 각 신용조사보고서(CRETOP), 각 회계연도 별 재무제표에 대한 감사보고서, F임대아파트에 대한 단지 상세현황 및 토지와 집합 건물에 대한 등기부등본, 혐의자 명함, 2013년 11월 29일 D 법인 4천만 원 횡령 혐의 관련 계좌 거래내역, 2014년 1월 29일 D 법인 2.1억 원 횡령 혐의 관련 계좌 거래내역, 수표 내역 리스트, 각 입금 전표, 2014년 2월 11일 D(주) 법인 5억 원 횡령혐의 계좌 거래내역, 자기앞수표 원장 조회, 수표 내역 리스트, T(주) W 거래내역 조회, 2014년 2월 28일 D(주) 법인 3억 원 횡령혐의 계좌 거래내역, 2014년 3월 24일 D(주) 법인 2.5억 원 횡령혐의 계좌 거래내역, 2014년 4월 2일 D(주) 법인 9억 원 횡령혐의 계좌 거래내역, T 법인 계좌(일부발췌본), J 법인 계좌(일부발췌본), (주)G 대차대조표 및 주식변동상황명세서(2009~2013), D 법인계좌인 광주은행 I 계좌 거래내역, 임대주택 매매계약서 사본 1부, 금전소비대차계약서, 차용증확인서, 영수증 사본 11부, 디지털포렌직센터에서 송부한 문서 정보철 1부, 회사의 문제점 등을 보고하는 문서, 사본 1부, L 명의 중소기업은행 통장 사본 1부, A 부동산 투자 현황표, 회장님 대여금 현황, 수사협조의뢰(카지노 칩 교환 자료요청), 각 수사협조의뢰(카지노 칩 교환자료요청)에 대한 회신, 2010. 1. 1.~2014. 10. 23. 기간 동안 게임 내역, T회사 개요 관련 자료 각각 1부, 2013년 3월 22일, 2013년 4월 30일, 2013년 5월 6일, 2013년 11월 25일, 2013년 11월 26일 각 D 횡령 관련 계좌흐름, 2013년 3월 22일, 2013년 4월 30일, 2013년 5월 6일 각 서부농협 감북지점 발행된 수표의 수표제시 정보, 각 수표 사본, D(주) 광주은행 I 거래내역, D(주) F아파트 분양 등 현황 자료, G 관련 출자금 및 대여금 회계상 손실처리 현황 자료, (주)G에서 (주)U 매각 과정 정리 자료, 각 법인등기부등본(주식회사 U), 각 주주 대여금 내역서, (주)V엔터테이먼트(V) 사업 관련 자료 1부, U 지분관계 자료 1부, 각 주주 대여금 내역서, 계정별 원장 및 전표(D 주식회사), 대표이사 가수금 내역서(2014년 9월~2016년 7월) : 주식회사 U, D(주) 통장 사본, 타행환입금증 및 통장 사본, D 주식회사 2015년 주주대여금 내역, 입금증, 자금일보 등 2015년 주주대여금 증빙자료, D 주식회사 2016년 주주대여금 내역, 입금증, 자금일보 등 2016년 주주대여금 증빙자료, D 정관 및 ING 생명보험 증권 첨부, ㈜G과 ㈜U 간의 부동산 매매계약서, V 사업자등록증, V주주명부, V 임대차계약서, V 정관

Application of Statutes

1. Article relevant to the facts constituting an offense and the selection of punishment;

Article 3 (1) 1 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 356 and 355 (1) of the Criminal Act (general) and choice of limited imprisonment

1. Discretionary mitigation;

Articles 53 and 55(1)3 of the Criminal Act (see, e.g., favorable circumstances, etc., for the following reasons for sentencing)

Judgment on the argument of the defendant and defense counsel

1. Claim on the crime of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;

A. Claim as to the portion of the amount used as a loan interest for the loan obligations of U.S. Co., Ltd. (hereinafter “U”)

U’s total amount of KRW 950,840,00 (attached Table 16,19,21,22,26-31,33,37,39,42,43,46,48,48,48,50,52,55,60-62,67,67,67,70,72,75,76,76,76,76,80,82,84-89, 91,92, 92, 95-97, 101,102,104,107,108, 110,15-17, 17, 195, 194, 141, 15, 215, 215, 214, 15, 214, 1361, 215, 216, 214, and 314 of G loans.

B. Claims on the portion of the amount paid to the Defendant for the interest of the loan

With respect to the portion of KRW 581 million (attached Table 34,98,99) that the Defendant received from D in order to use as the interest on the Defendant’s loan (attached Table 34,99), it is not actually paid to the Defendant and used by the Defendant, but it is merely an accounting account that was paid to the Defendant in external form and received again as interest on the existing loan, and thus, the crime of embezzlement is not established.

2. Determination

A. As to the portion used as U’s loan interest

Comprehensively taking account of the facts and circumstances as seen earlier, the part of the repayment of U’s loan interest out of the U’s funds is only for the benefit of U or Q, and it is difficult to view it as being for D or G, and the Defendant and the defense counsel’s allegation in this part is without merit.

1) On December 30, 2009, the Defendant established G on December 30, 2009 while operating D as a shareholder of 100% of D for the purpose of leasing multi-family housing (a share of 10% was nominal trust to X, and returned around December 2014) and a representative director.

2) The present D currently holds 100% of G’s shares (shares 3.14% was nominal trust to Q.

A. On October 4, 2012, the Defendant, who was the representative director of D, actually managed G by determining important matters related to G management.

3) On July 11, 2011, Y Co., Ltd. was established as a company in charge of G distribution. On December 18, 2012, Y Co., Ltd. changed its trade name to “Co., Ltd. Z” and again, to “U” on September 16, 2013.

4) At the time of the closure of G, U agreed to acquire the land, production facilities, etc. from G from G to KRW 5 billion, and decided to acquire approximately KRW 4 billion loan obligations to G financial institutions (one bank and Nonghyup), and the remainder of KRW 1 billion out of the five billion loan obligations to G was disposed of as borrowing from G, but up to now, U did not pay KRW 1 billion loan.

5) U is a company for which Q Q held 100% of the Defendant’s 100 shares, and D, G, and the Defendant did not hold U shares.

6) Since Q has jointly and severally guaranteed the above loan obligations acquired by U.S., there was a benefit in preventing an auction of U’s assets by paying interest on the loan obligations.

7) The Defendant appears to have tried to prevent the progress of the auction procedure regarding U’s assets by repaying the loan interest interest rate on U’s above loan obligations with U’s funds for the above benefit of Q Q as above.

8) Ultimately, the Defendant appears to have used D’s property as if it were one’s own property in violation of the purpose of the entrustment with the aim of seeking the benefit of U or Q, a third party.

C. As to the amount paid for the interest on the loan to D Defendant

According to the above evidence, it is recognized that the sum of KRW 581 million paid to the defendant to use as interest for the amount of the shareholder loan to the defendant (attached Form 34,98,99) was not merely formally paid to the defendant, but once the above amount was transferred from the account under the name of the defendant to the account under the name of the defendant, and again, the above amount was deposited into the account under the name of the defendant as interest for the amount of the shareholder loan to the defendant. As above, the above amount was actually paid from the account under the name of the defendant. Since the money paid to the defendant was used again to pay interest on the amount continuously lent to the defendant, it constitutes a case where the above amount was used in addition to the funds of the defendant for the interest of the defendant. Accordingly, this part of the defendant and the defense counsel is without merit.

Reasons for sentencing

1. Scope of applicable sentences under law: Imprisonment for two years and six months to fifteen years;

2. Application of the sentencing criteria;

[Determination of Punishment] Embezzlement and Breach of Trust

[Special Convicted Persons] Reduction element: Substantial 1 company

[Scope of Recommendation] Imprisonment of 2 years and 6 months to 5 years (Mitigation)

3. Determination of sentence: Three years of imprisonment; and

The defendant has embezzled a large amount of 6.4 billion won continuously over a long period of time, and has used it individually as embezzlement, such as gambling, etc., and upon the commencement of the investigation, the crime has been escaped for a long time, and the nature of the crime has been bad, and the damage has not yet been fully recovered (the defendant and the defense counsel asserted that the real estate in the name of the defendant such as the defendant was paid in kind to D or sold to a third party and has recovered from the purchase price, but the above assertion cannot be accepted, since it is difficult to view that the real estate is actually owned by the defendant, since the above real estate was sufficiently explained, since most of the D funds embezzled by the defendant are the lease deposit received from the lessee of the rental house, it is the amount that must

However, the defendant is one shareholder who owns 100% of the victim D's shares, and there is no same criminal record, and there is no previous criminal record exceeding a fine for the last twenty years.

The punishment as ordered shall be determined in consideration of all the sentencing conditions shown in the pleadings of the instant case, such as the Defendant’s age, health, character and conduct, environment, family relationship, motive for committing the crime, and circumstances after committing the crime.

Parts of innocence

1. Summary of the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

G is a corporation in which the Defendant’s Republic Q and D held 100% of equity interest in the Defendant’s Republic of Korea, and since its establishment on December 30, 2009, the amount of net loss in the current year has continuously increased to KRW 400 million in 2010, KRW 2.8 billion in 2011, KRW 5.9 billion in 2012, KRW 6.3 billion in 2013 billion in 2013, the first year of business activity was KRW 7.3 billion in 2010 in 2010, and the amount of debt has increased each year and the business operator has increased, and thus, barring special circumstances, the company lost its ability to pay due to its own ability because it is impossible to convert the black person into its own ability.

Therefore, even if the Defendant, the representative director of D, was prohibited from lending funds to G, and it was inevitable to lend funds, there was a duty to dispose of and use the funds in the direction of best benefit to the company, by taking appropriate measures to prevent damage to the victim by undergoing legitimate procedures, such as obtaining a security sufficient to preserve claims, such as obtaining a resolution of the board of directors, etc., by comprehensively assessing the future business prospects, repayment ability, and the possibility of normalization, etc. of G.

Nevertheless, on March 10, 2010, the Defendant did not take any measures to guarantee and compensate for losses at the D office and, without the resolution of the board of directors, had the victim D lend 40 million won to G short-term without any resolution of the board of directors, and thereafter, had the victim D lend 200 times from November 5, 2013 as shown in the attached list of crimes (2) by allowing G to obtain property benefits equivalent to the same amount, as stated in the attached list of crimes (2), and caused D to obtain property damages equivalent to the same amount.

2. Relevant principles;

In general, the intent of the crime of occupational breach of trust is established when it is combined with the perception that the person who deals with another's business in the course of performing his/her business would inflict property damage on the principal and that the intention of his/her or a third party is in violation of his/her duties. Since the management of a company is inherent in the inherent risk, even if the manager made a careful decision with the belief that it would be consistent with the interests of the company based on the information collected in good faith and without any intent to take personal benefits, the prediction may lead to the occurrence of losses to the company. As such, in determining whether there was an intentional breach of trust to the manager in the course of the business judgment, the characteristics of the business judgment in the management of the company should be considered (see, e.g., Supreme Court Decision 2002Do3131, Oct. 28, 2004). The determination of whether the intent of the crime of occupational breach of trust can be recognized on the grounds of the business judgment should be based on the background and motive leading up to the business judgment at issue, content of the company, economic situation, probability of losses and profits.

3. Determination

As the parent company and the subsidiary company are the main body with separate independent legal personality, many interested parties such as creditors and shareholders of each person are involved, each person can have their own interests or group interests according to the joint goals of both parties. In case where the realization of such group interests has an economic significance and it can be seen that the parent company also has a profit as a whole, it can be seen that the parent company's own interests have sacrifice the parent company's own interests and the management necessity or purpose is recognized to pursue group interests through the realization of the subsidiary's interests.

In full view of the following facts and circumstances acknowledged by the evidence duly adopted and examined by this court, it seems that D, the parent company, judged at the time of lending money to G, the subsidiary company, as described in the above facts charged, could recover the loan in the event that G’s business was carried out well and the parent company, as a whole, could have been benefiting from D. Thus, the Defendant’s lending of D funds to G is an act based on the good faith management judgment as D’s representative director. Accordingly, at the time of the above lending of funds, the Defendant had the intent to take property gains to D, i.e., the intent to take property gains to the principal or a third party.

It is difficult to conclude that the evidence submitted by the prosecutor alone is insufficient to recognize it, and there is no other evidence to acknowledge it.

B. Causes and motive of lending funds to G

1) As seen earlier, the Defendant established G on January 12, 2009 to diversify the business structure and create additional profits while operating D as a shareholder and representative director, who is 100% of D for the purpose of leasing multi-family housing.

2) As seen earlier, D currently holds 100% of G’s shares, and the Defendant, the representative director of D, was practically managing G by determining important matters related to its management from the time of establishment of G.

3) On May 6, 2008, Chungcheongnambuk-do purchased land and buildings on the land (hereinafter referred to as "factory, etc.") from AA, and on January 8, 2010, through a resolution of a temporary general meeting of shareholders, D used to contribute a factory, etc. to G in kind and acquired the stocks of G in return for the contribution. On the other hand, on September 6, 2012, D converted the amount of KRW 7 billion out of loans extended to G into investment.

(c) Business details of G;

1) G was established on January 12, 2009 for the purpose of manufacturing and selling salt, rice rice, Chinese medicine, beverages, etc., and was equipped with production facilities, such as urban village. On May 1, 2010, G was engaged in production and sales of rice tea, rice tea, etc.

2) According to the market report on the subdivision of processed rice products in 2013, which was published by the Ministry of Agriculture, Food and Rural Affairs and the Korea Agriculture and Fisheries and the Korea Agriculture and Food Trade Corporation, the domestic market size of rice tea is recognized to have been continuously increased for the period from 2010 to 2011, and around 2010, the market size of rice tea and rice tea is growing, and the prospects of business fields, such as urban tea and rice tea, etc. were clearly clarified.

3) G set up a business agreement with a Japanese urban development enterprise and set up several points in the city brand called “AB,” and carried out a phased urban development project on April 29, 201, including obtaining certification of Hazard Analysis and Critical Control Points (HCCP).

(d) the economic situation at the time D;

1) D had paid net income for KRW 300 million in 2007. However, D had maintained a relatively sound financial position by again paying net income for KRW 500 million in 2009.

2) Due to the characteristics of rental business, which is the main business of D, there was a low probability that a substantial portion of the rental deposit may be left from a short time, and thus, it was not anticipated that D’s financial situation will rapidly change.

3) Although D recorded net losses of KRW 2 billion in 2010, KRW 3.8 billion in 201, KRW 6.9 billion in 2012, KRW 9.8 billion in 2013, and KRW 9.8 billion in 2013, it is merely a result that reflects losses incurred due to loans to G from around 2010.

4) From around 2012 to 2013, the number of lessees of the F apartment in the net city with increased supply volume of the housing due to the holding of the female X-ray and the net gardening exhibition increased, and as a lessee of the F apartment in the net city leased D leaves the house, there was a need to urgently prepare a lease deposit to be returned to the lessee, thereby suspending the lending of G. G was closed on December 17, 2013.

5) Although there is room to view that D could have been faced with the shortage of funds as a result of continuous lending of funds to G, D could have had economic surplus to the extent that D could continue to provide funds to G in the absence of special circumstances such as the foregoing 4).

(e) Possibility of loss occurrence and benefit acquisition;

1) G appears to have used most of the loans received from D in compliance with its original business purpose, including having production facilities, such as urban village.

2) Since the sales revenue of G continuously increased to KRW 21 million in 2010, KRW 680 million in 201, KRW 4152 million in 201, and KRW 6.8 billion in total from March 2013 after the incorporation of a corporation, there was a possibility of increasing sales thereafter.

3) Although G recorded net loss of KRW 424 billion in 201, KRW 2.87 billion in 201, KRW 2870 million in 201, and KRW 5.9771 million in 201, and KRW 5.071 million in 2012, it is difficult to conclude that the enemy will be accumulated thereafter, taking into account that there were a large amount of initial costs incurred in the construction of manufacturing facilities, etc., and that the outlook in the field of urban village and rice tea, as seen earlier, was revealed.

4) In a case where a company establishes a subsidiary to make an investment in a new business, even if the new business prospects were to have occurred due to a lack of interest in the initial business, if such prospects were to have been promising, it cannot be readily concluded that the company had the intent of breach of trust at the time of such investment in the business. If a criminal liability is held on the ground that such act was committed by the intent of breach of trust, solely on the ground that there was no interest in the initial business, the company, etc. cannot make an investment in any new business that requires a long-term

5) Since it is likely that D would have improved profitability due to the increase in sales of G if D provided more funds to G for a future period of time, and the business stability. If G profitability, which is a subsidiary, has improved, it is probable that D would obtain D benefits due to the increase in the value of the stocks of G owned by D, the parent company, and therefore, D and G could have a relation pursuing collective interests according to the common goals.

4. Conclusion

Thus, this part of the facts charged constitutes a case where there is no proof of facts of crime, and thus, a not-guilty verdict is rendered pursuant to the latter part of Article 325 of the Criminal Procedure Act (However, since the defendant does not want to give public notice of the part not-guilty, the summary of the verdict is not publicly notified pursuant to the proviso of Article

Chief Judge Cho Nam-nam

Judges authorized-type Judge

Judges Yoon Dong-dong

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