[1] The meaning of "multi-level marketing entity" under Article 13 (1) and Article 23 (1) of the Door-to-Door Sales Act

[2] The case holding that Article 13 (1) of the Door-to-Door Sales Act applies to a "multi-level marketing business operator" where a member has a six-stage class and a six-stage class for the head of the member is promoted from the head of the member to the head of the agency according to the number of persons recruited by the member, and a recommendation fee is paid according to the sales performance in the case of a member, and a certain allowance is paid regardless of the sales performance of an assistant salesman from the head

[1] Under Articles 13(1) and 23(1) of the Door-to-Door Sales Act, the term "multi-level marketing business operator" refers to a person who opens, manages, and operates a multi-level marketing organization in which a sales business operator sells goods, etc. supplied by a specific person to a consumer (including a person who first purchases goods, etc. from a multi-level marketing business operator who wishes to be a multi-level marketing business operator pursuant to Article 4 subparag. 3 of the Enforcement Decree of the same Act) and his/her subordinate salesman purchases all or part of such goods, etc. from a specific person as his/her assistant salesman, and if he/she engages in the same activity as his/her assistant salesman, then he/she solicits consumers to obtain certain profits which consist of sales of goods, etc. and support allowances paid by the multi-level marketing business operator to the relevant multi-level marketing operator (referring to a case where the number of salesmans who are admitted to a sales organization is three or more stages) and then does not inquire of the kind, value, and size of profits presented to the seller except where the multi-level sales business operator engages in transactions.

[2] The case holding that in the case of a member's membership, the head of the division-general-head of the bureau-head-head's six stages of class and the head of the team-level promotion from the head of the division to the head of the agency according to the number of persons recruited by the member, the member's recommendation fee shall be paid according to the sales performance, and a certain allowance shall be paid regardless of the sales performance of the assistant salesman from the head of the division to the head of the business group, it constitutes

[1] Articles 2 subparag. 5 and 6, 13(1), and 23(1) of the Door-to-Door Sales Act / [2] Articles 2 subparag. 5 and 6, 13(1), and 23(1) of the Door-to-Door Sales Act

[1] Supreme Court Decision 2006Do4401 Decided September 22, 2006

Defendant 1 and five others

Defendant

Man-Woo

Attorneys Lee Han-hee and 3 others

Daegu District Court Decision 2006Gohap5670 Decided November 23, 2006

The judgment of the court below is reversed.

Defendant 1 shall be punished by imprisonment with prison labor for a year and six months, by imprisonment for a year of imprisonment for a defendant 2, by imprisonment for a year of defendant 3 and 4, by imprisonment for a period of six months, by the defendant 5 and 6 by a fine of ten thousand won, respectively.

When Defendant 5 and 6 fail to pay the above fine, the above Defendants shall be confined in a workhouse for the period calculated by converting 50,000 won into one day.

The number of days of detention before the pronouncement of the judgment below shall be 62 days, each penalty against the defendant 1 and 2, each day, and each penalty against the defendant 3 and 4, respectively.

However, the execution of the above punishment shall be suspended for three years for Defendant 2, and for two years for Defendant 3 and 4 from the date this judgment became final and conclusive.

To order each of the defendant 2, 3, and 4 to provide community service for 160 hours.

An order of provisional payment of an amount equivalent to the above fine against Defendant 5 and 6 shall be issued respectively.

1. Summary of grounds for appeal;

A. Defendant 1, 2, 3, and 6's assertion of mistake of facts

Nonindicted Co. 1 has six stages of class, but the sales structure is the one-stage sales structure that is paid recommended allowances when a salesman sells directly to a subordinate salesman. From the class of section chief, it is different from the multi-stage sales system that pays bonuses according to the sales of a salesman and a subordinate salesman because a salesman is paid a certain amount of wages regardless of the sales of a salesman or a subordinate salesman. Therefore, the lower court erred by misapprehending the fact that the lower court did not register multi-stage sales, and found the Defendants guilty of establishing, managing, and operating a multi-stage sales organization, and thereby adversely affected the conclusion of the judgment.

B. Defendants’ assertion of unreasonable sentencing

Considering the various circumstances against the Defendants, it is unfair that the sentence of two years of suspended execution is too unreasonable in the year of imprisonment with prison labor for Defendant 1, two years of imprisonment with prison labor for Defendant 2, and one year of imprisonment with prison labor for Defendants 3, 4, 5, and 6, which was sentenced by the lower court.

2. Ex officio determination on Defendant 3 and 4

According to the reasoning of appeal by Defendant 3 and 4 ex officio prior to the judgment on the grounds of appeal, the detention warrant for questioning the suspect bound in the records (the trial records 147 pages, 191 pages), and the detention warrant for arresting the suspect (the trial records 235 pages, 279 pages), Defendant 3 and 4 were arrested for questioning the suspect before detention on September 22, 2006, and each request for detention warrant was dismissed, and they were released on the same day. Thus, the court below, which sentenced the defendants to a suspended sentence of two years for a year of imprisonment, should be included in the imprisonment with prison labor sentenced by the court below, and thus, the part on the defendant 3 and 4 among the judgment below as to the defendant 3 and 4 could no longer be maintained.

However, the defendant 3's assertion of misunderstanding of facts is still subject to the judgment of this court, even if there is a ground for ex officio reversal as above.

3. Judgment on the Defendants’ assertion

A. As to the assertion of mistake of facts against Defendant 1, 2, 3, and 6

Article 13 (1) and Article 23 (1) of the Door-to-Door Sales Act (hereinafter referred to as the "Door-to-Door Sales Act") shall apply to a person who establishes, manages, and operates a multi-level marketing organization in which a seller supplies goods to a specific person (including a person who first purchases goods, etc. from a multi-level marketing business entity that intends to be a multi-level marketing business entity pursuant to Article 4 subparagraph 3 of the Enforcement Decree of the Door-to-Door Sales Act) and a person who has a multi-level marketing business entity become a multi-level marketing business entity and has a multi-level marketing business entity become an assistant salesman of a specific person and has a certain person become an assistant salesman of such specific person perform the same activity as that of such specific person, then the person's retail profit from selling goods, etc. to the consumer and the person who has a multi-level marketing business entity's bonus paid to the multi-level marketing salesperson by stages (referring to a case where the number of salespersons who has joined the sales organization is three or more stages).

In this case, according to the evidence duly adopted and examined by the court below, the defendants sold 4.4 million won of the market price to the buyers, 1.1 million won of the aggregate correction machine (one unit) and 200,000 won of the recommendation allowance at each time the members raised the sales performance of 1.2 million won of the members, and 200,000 won of the class allowance at each week is paid to the head of the division promotion, and 40,000 won of the class allowance at each week by the head of the division promotion to two heads of the subordinate departments, and 1.1.1.1.1.0 won of the above portion of the promotion allowance at each of the above part of the multi-level sales business entities are paid to the head of the subordinate departments, regardless of the size of the sales performance of 10 units, and 2.1.0,000 won of the above part of the sales promotion allowance at each of the above part of the multi-level sales business entities are not paid to the head of the subordinate division and the head of the sales division.

B. As to Defendant 1, 2, 5, and 6’s assertion of unreasonable sentencing

Each of the crimes of this case is a case where the defendants operated a multi-level marketing organization without registering multi-level marketing and recruited 1,032 members to sell a total amount of KRW 17,043,400,000 in the market price of massage and pelvisers, and without registering multi-level marketing, and the defendants' liability is not less than that of the defendants. Thus, the defendants cannot be exempted from punishment corresponding to the degree of their participation.

However, among the sales performance of the Defendants, KRW 9,981,173,560 was paid to the members with recommendation allowances and class allowances of KRW 17,043,40,000. After the issue of this case, the Defendants’ recruitment of new members was suspended after the issue of this case, and there was no victim actually revealed after returning investment money to investors, Defendant 1, 5, and 6 did not have any previous criminal records, and there was no damage caused by the reflect correction, which is the medical device sold by the Defendants. Defendant 5, and 6 did not own capital in the non-indicted 1 Stock Company or have no equity shares, and only formally have the position of the vice president and do not actually participate in the management thereof, the Defendants filed a report with the competent authority on the door-to-door distributor, and other various circumstances that meet the conditions for the sentencing of this case, such as the age, character and conduct of the above Defendants, motive and environment of the crime of this case, the motive and consequence of the crime of this case, and circumstances after the crime, the sentencing of the above Defendants is unreasonable.

3. Conclusion

Therefore, pursuant to Article 364(6) of the Criminal Procedure Act, the part concerning Defendant 1, 2, 5, and 6 among the judgment of the court below regarding Defendant 1, 2, 5, and 6 is reversed, and the part concerning Defendant 3 and 4 among the judgment of the court below ex officio is reversed, and the following is again decided after pleading.

The summary of the facts charged and the evidence is as shown in each corresponding column except for the addition of “each police protocol against Nonindicted 2 through 16” to the summary column of the evidence of the court below. Thus, it is cited as it is in accordance with Article 369 of the Criminal Procedure Act.

1. Relevant legal provisions concerning criminal facts;

Articles 51(1)1 and 13(1) of the Act on Door-to-Door Sales, Etc., Articles 6(1) and 3 of the Act on the Regulation of Conducting Fund-Raising Business without Permission, Articles 44(1) and 16(1) of the Medical Devices Act, Article 30 of the Criminal Act

1. Selection of punishment;

A. Defendant 1, 2, 3, and 4: Selection of imprisonment

B. Defendant 5 and 6: Selection of fine

1. Aggravation of concurrent crimes;

Article 37 (former part), Article 38 (1) 2, and Article 50 of the Criminal Code

1. Invitation of a workhouse;

Articles 70 and 69(2) of the Criminal Act (Defendant 5, 6)

1. Calculation of days of detention;

Article 57 (Defendants 1, 2, 3, and 4)

1. Suspension of execution;

Article 62(1) of the Criminal Act (Defendant 2, 3, and 4)

1. Social service order;

Article 62-2 of the Criminal Act and Article 59 of the Act on Probation, etc. (Defendant 2, 3, 4)

1. Order of provisional payment;

Article 334(1) of the Criminal Procedure Act (Defendant 5, 6)

Judges Lee Ho-woo (Presiding Judge)