2016Gohap1213 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud)

A

double indictments, chip (public trial)

Law Firm B

Attorney C

September 22, 2017

A defendant shall be punished by imprisonment for not less than one year and six months.

However, the execution of the above punishment shall be suspended for three years from the date this judgment became final and conclusive.

Criminal facts

The defendant is a person who was a substantial representative director of D Co., Ltd.

On February 20, 2014, the Defendant entered into a joint agreement with I who already invested KRW 1.60 million and actually owns D Co., Ltd. to jointly implement the above project, and entered into a joint agreement to jointly implement the above project on August 13, 2014 at the K office of the victim management company located in Songpa-gu Seoul, Busan District Court, Busan District Court, where 20,469§³ and G forest 42,537m real estate development project, which is a real estate development project of KRW 1.6 billion in land in the city where D Co., Ltd. is proceeding with the victim E Co., Ltd., and around August 13, 2014, the Defendant concluded a joint agreement to transfer and acquire the above project site and the company shares to be transferred by K Co., Ltd. to the victim management right from the Defendant.

However, the Defendant did not have invested KRW 1.6 billion in H development projects previously conducted, and around February 20, 2014, the Defendant did not entered into a sales contract with I for the said project site. According to the aforementioned joint development agreement, the Defendant entered into a sales contract for the said project site around February 21, 2014 with the victim on or around February 24, 2014, and subsequently, concluded a sales contract for the said project site, etc. on or after the victim’s business was smoothly carried out, and requested the victim to lend business expenses, such as acquisition of shares, etc., or to pay KRW 1.6 billion for the said project site after the conclusion of the contract for transfer of the said shares and business right with the victim, but did not perform its obligation to pay KRW 1.6 billion.4 billion in total (2.4 billion in total) with the Defendant’s account transfer KRW 201 billion in the name of the Defendant, 2014.4 billion in total, by deceiving the victim, and received KRW 1.4 billion in total account transfer from the Plaintiff under the name of M& 214.4 billion.

Summary of Evidence

1. Partial statement of the defendant;

1. Each legal statement of witness R, E, and I;

1. Statement E in the suspect examination protocol of the accused by the prosecution;

1. Statement of S in the second police interrogation protocol against the accused;

1. Full certificates of each registered matter, a joint agreement, a certificate of confirmation, a confirmation, a certificate of stocks and a contract for transfer or takeover of a business right, a real estate sales contract or a special agreement as of February 24, 2014; the addition of a special agreement; a real estate sales contract or a contract for the sale or purchase of a real estate as of August 19, 2014; a reply to a request for investigation cooperation; submission of evidence; and a statement of evidence;

Application of Statutes

1. Article applicable to criminal facts;

Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes and Article 347 (1) of the Criminal Act (generality)

1. Discretionary mitigation;

Articles 53 and 55(1)3 of the Criminal Act (The following consideration for the reasons for sentencing):

1. Suspension of execution;

Article 62(1) of the Criminal Act (The following grounds for sentencing has been repeatedly taken into consideration for favorable circumstances)

Judgment on the Issues

1. Summary of the defendant and defense counsel;

A. The phrase “the Defendant had already invested KRW 1.6 billion in the H Creation Project (hereinafter “instant project”) in the judgment of the Defendant, and the phrase “the Defendant invested KRW 1.6 billion in the joint project agreement as indicated in the judgment was merely an expression that the Defendant would not actually make an investment but be responsible for the said amount.”

B. Since the defendant did not conclude a sales contract on the business site, etc. yet, the defendant set forth in the joint project agreement that "all business activities, such as the purchase and sale contract on the land for the business site," and it cannot be the contents of deception.

C. The Defendant acquired 100% of the shares and managerial rights of D Co., Ltd. from I and transferred them to the victim, thereby fulfilling all obligations under the above joint project agreement and the agreement for transfer of shares and business rights (hereinafter “business rights transfer agreement”). Even if I rescinded a sales contract on the business site, etc. later, the victim falls under a third party under the proviso of Article 548(1) of the Civil Act and may continue to hold the said shares and managerial rights, and thus there was no loss.

2. In full view of the evidence duly admitted and examined by the court, the following facts or circumstances are revealed.

A. A. Around June 2013, the Defendant: (a) selected a de facto representative of D Co., Ltd. (hereinafter “D”); (b) concluded a contract with D Co., Ltd. to take out a PF loan to purchase the instant business with KRW 4 billion; and (c) held office as D’s internal director on the 25th of the same month. However, as his/her father’s health problems, he/she was unable to carry out his/her business, he/she entered into a joint agreement with D’s corporate director with the content that the Defendant would jointly carry out the instant business, designating K Co., Ltd. operated by the victim as the Si Corporation on the last day of January 2014.

B. Article 4(1) of the Joint Business Agreement provides that “In order to jointly promote this project, the Defendant invested KRW 1.6 billion in the total land purchase price of KRW 4 billion, and the victim invests KRW 300 million in the total land purchase price of KRW 4 billion, but the victim shall use KRW 200 million in the remainder payment, and KRW 100 million in the operating expenses for the progress of the project under this Joint Business Agreement.” However, the Defendant did not have invested KRW 1.6 billion in the instant project, and the victim paid KRW 300 million to the Defendant on February 21, 2014 without knowledge.

C. As to the developments leading up to the conclusion of the joint agreement, the victim stated that ① the ratio of equity shares in the instant project to KRW 1.6 billion and KRW 300 million is reflected in the guarantee ability of the contractor (K) required for the PF loan; ② the portion of the Defendant’s performance of all business, such as the purchase and sale contract for the land on the project site, is merely the business that the Defendant has become aware of the purchase of the project site, etc. from I after the Defendant entered into the joint agreement on November 2014, and ③ the victim stated that he had become aware of the purchase of the project site, etc. from I after the Defendant entered into the joint agreement (the record of witness examination, 8, 11, 14 pages).

D. On February 24, 2014, after the conclusion of a joint agreement, the Defendant purchased D shares from I in KRW 3.3 billion, and in the said agreement, the intermediate payment of KRW 200 million up to April 30, 2014, and the remainder intermediate payment of KRW 2 billion up to May 31, 2014, the Defendant agreed to receive KRW 100 percent of the said shares upon payment of the intermediate payment of KRW 2 billion (hereinafter referred to as “first sale contract”).

E. According to a joint business agreement, the Defendant had the victim take over 50% of the D shares, but due to financial shortage, the part payment pursuant to the first sale contract was not paid only KRW 100 million, and thus, was not received from I. In such a situation, the victim transferred the amount of KRW 20 million on April 18, 2014 and KRW 10 million on April 22, 2014 to the Defendant, as indicated in its reasoning, and the Defendant used the amount of KRW 100 million as the part payment of the first sale contract and the remainder as the business expense of the instant case.

F. Nevertheless, the victim, who did not properly proceed with the instant project, such as the rejection of the PF loan, received all D stocks held by the Defendant as a broker around August 2014, and entered into a contract with the Defendant for transfer of business rights.

G. According to the above contract for the transfer of business right, K inputs KRW 600 million, which is reverted to the victim’s share in ownership, consisting of KRW 300 million paid by the victim according to the joint business agreement, KRW 210 million paid by the loan, and operating expenses of the instant business. The victim paid KRW 300 million, as stated in its reasoning, to the Defendant in accordance with the above contract as contract deposit.

H. Meanwhile, the Defendant entered into a contract with I on August 19, 2014 to reduce the purchase price of KRW 3.1 billion as stipulated in the first sale contract with I, and the down payment of KRW 300 million was received retroactively on July 1, 2014, and the intermediate payment of KRW 100 million was received retroactively on July 13, 2014, and the part payment of KRW 1.3 billion until the 30th of the same month, and the part payment of KRW 1.3 billion until October 25, 2014 (hereinafter “second sale contract”).

(i) On October 25, 2014, when the Defendant did not pay KRW 1.3 billion by October 25, 2014, the third intermediate payment payment date stipulated in the second intermediate payment contract, I notified the Defendant that he would cancel the second intermediate payment without paying the said intermediate payment by November 7, 2014, and accordingly, the Defendant would return the D shares and dispose of the relevant directors’ resignation, etc., and notified the Plaintiff, who is the D representative director on the same day, to the effect that he would have notified the Defendant of the cancellation of the contract as above by means of a document with a fixed date and seek cooperation in the restoration of the original status following the cancellation of the second sales contract.

3. Determination

A. In light of the above facts and the records and arguments of this case and the details of each contract, the objective meaning of the text of the joint agreement, which is a disposal document, the defendant's financial status at the time, and the degree of the victim's awareness of the contents of the progress of the project of this case, etc., it can be sufficiently recognized that the defendant, as stated in its holding, has received 300 million won of investment under the joint agreement by deceiving the victim as if the defendant had already invested in the project of this case in the project of this case, and has received 300 million won of investment under the joint agreement as stated in its reasoning from the victim who is still in a state of mistake in a series of process of accepting D stocks, etc. after the fact that he/she received the money under the pretext

B. Even if there is a certified fixed date prior to the cancellation of the second sale contract and the notification that the shares should be returned, as alleged by a defense counsel, the victim’s name trustee was notarized in the minutes of the general meeting of shareholders, thereby obtaining the consent of the victim with a fixed date on the transfer of shares to the victim, and thus the victim is likely to be a third party protected from the effect of the termination of the above contract, even if the crime of fraud is established by deceiving the third party, thereby acquiring property or pecuniary gains from the defective intent, the essence of the crime is the acquisition of property or pecuniary gains from the deception, and it does not require the other party to have actual property losses (see, e.g., Supreme Court Decision 2003Do7828, Apr. 9, 2004). Such circumstances do not affect the acquisition of the defendant’s fraud and the recognition of deception.

Reasons for sentencing

1. Scope of applicable sentences under Acts: Imprisonment for one year and six months to fifteen years; and

2. Scope of recommendations according to the sentencing criteria;

[Determination of Punishment] Fraudulent Crime Group, General Fraud, Type 3 (at least 500 million won, but less than 5 billion won)

[Special Mitigation] In a case where punishment is not granted or a considerable part of damage is recovered;

[Scope of Recommendation] Imprisonment of 1 year and 6 months to 4 years (Mitigation)

3. Determination of sentence;

The instant crime means that the Defendant, who is engaged in the construction business, has already paid KRW 1.6 billion to raise funds for the development project of real estate and caused the victim to raise funds in an amount equivalent to KRW 810 million for the said project by making false means as if he/she had already paid KRW 1.6 billion to raise funds for the development project of real estate. Not only is the amount of damages but also it is not easy that the victim and other participants in the project have placed in an uncertain legal relationship for a long time

However, there are favorable circumstances such as the fact that the defendant transferred all D stocks to the victim so that the victim can carry out the above business, the fact that 500 million won out of 810 million won received from the victim is paid to the victim, and the victim cooperates with the victim to succeed to the second sale contract as it is, and the victim further pays 100 million won to the victim and reaches an agreement with the victim

In addition, considering the various circumstances shown in the records and arguments, such as the age, character, conduct and environment of the defendant, motive and consequence of the crime, relationship with the victim, circumstances after the crime, etc., the punishment as ordered within the scope of the sentencing guidelines shall be determined and the execution thereof shall be suspended.

The presiding judge and judges;

Judges Sung Jae-in

Judges' Index

1) To the extent that the identity of basic factual relations is recognized, the specific content of deception is partially different from the facts charged.