Defendant 1 and 1

Defendants

Hong Franscis

Attorney Park Si-hwan

Seoul District Court Decision 2003 High Court Decision 8829, 2003 High Court Decision 1261 delivered on December 2, 2003

The judgment of the court below is reversed.

Defendant 1 shall be punished by imprisonment for 10 months, and by a fine of 50,000,000 won for Defendant 2.

With respect to Defendant 1, twenty-seven days of detention days before the judgment of the court below is made shall be included in the above sentence: Provided, That with respect to Defendant 1, the execution of the above sentence shall be postponed for two years from the date

1. Summary of the Defendants’ defense counsel’s appeal

A. misunderstanding of facts or misunderstanding of legal principles

① As to the violation of the Commercial Act, the fraudulent entry in the authentic copy of the authentic deed and the exercise thereof, prior to the establishment of Defendant 2, the total amount of KRW 60 million in the production cost of the film “Fladra”, KRW 40 million in office deposit, KRW 160 million in exclusive contract deposit, KRW 100 million in operating expenses of other employees’ benefits and offices, etc., and KRW 1 billion in total was reduced to meet the actual amount invested after the establishment of the company, as well as KRW 1 billion in the amount to meet the actual investment amount after the establishment of the company, and Defendant 1’s wife Nonindicted 1, etc. and invested in the company as loans, etc., it is not established under the Commercial Act. Accordingly, the crime of false entry in the authentic deed and the exercise of the same event is not established. ② With respect to the violation of the punishment of each tax offense as indicated in the judgment of the court below, the court below found Defendant 2 not only made a false report to evade taxes in return for the tax return process, but also found that Defendants 1 did not have actually paid for the unlawful practices.

B. Unreasonable sentencing

As to the violation of the Commercial Act in the holding of the court below, in light of the following facts: (a) Defendant 1 took the form of payment by borrowing KRW 2 billion from a bond company due to Nonindicted 2’s failure to implement the investment promise; (b) subsequently reduced capital by the actual amount of investment; (c) tax evasion was later paid in full; (d) the amount of evaded tax and its additional tax; and (e) the amount of each breach of trust provided by the decision of the court below is a very small amount; and (e) the amount of each breach of trust provided by the other party is a significant amount, the sentence of the court below that sentenced Defendant 1 to Defendant 1 for a suspended sentence of ten months; and (e) a fine of KRW 1,50 million against Defendant 2.

2. Determination:

A. Judgment on misconception of facts or misapprehension of legal principles

(1) Violation of each Punishment of Tax Evaders Act (Defendants) in the holding of the court below

In full view of the evidence duly admitted by the court below, including Defendant 1’s statements in the court below and the prosecutor’s office, and each statement in the prosecutor’s office of Nonindicted 3 and Nonindicted 2, the fact that Defendant 1 evaded value-added tax and corporate tax as stated in the judgment of the court below is sufficiently recognized and the criminal intent against Defendant 1 is sufficiently recognized. Thus, this part of the ground for appeal is without merit.

(2) The fact that each of the facts charged in breach of trust in the judgment of the court below (the defendant 1 and the party court changed the indictment for this part of the facts charged, but this part of the grounds for appeal corresponds to the changed facts charged, and therefore, it is decided as to this.)

As seen below, Non-Indicted 4 made a statement to the effect that “Non-Indicted 5 and Non-Indicted 6 gave money to them at the time of the trial,” and that “Non-Indicted 4 had been forced to make a statement to the effect that “Non-Indicted 5 and Non-Indicted 6 are not related to the Defendant’s own decision,” and that “Non-Indicted 4 had been forced to make a statement to the effect that it would be consistent with this part of the facts charged.” However, Non-Indicted 4 made a statement to the effect that “Non-Indicted 4 and Non-Indicted 4 had no reason to make a statement to the effect that Non-Indicted 4 had been forced to make a statement to the effect that Non-Indicted 5 and Non-Indicted 4 had no reason to make a statement to the effect that Non-Indicted 4 had no more than KRW 1,200,000,000 for the purpose of public prosecutor’s investigation and to make a statement to the effect that it would be difficult to see that the statement was made by Non-Indicted 1 and Non-Indicted 4.

In addition, the defendant also responded to the prosecutor's question that "It is true that it is not possible to deliver money under the name of Nonindicted 8's show program because he mainly proceeds from the show program, and the defendant had a plan to establish an entertainment planning company," and the prosecutor's question that "it is true" (1033 pages of investigation records) and "it was about KRW 4 million to Nonindicted 5 through Nonindicted 4, but the reason was that it was the reason that it was changed to contribute to Nonindicted 9 on the designated Saturday (1036 pages of investigation records)," and " Nonindicted 6 was 3 million won through Nonindicted 4 on the day on which he paid money to Nonindicted 5, but it was the purport that he was the musical video of Nonindicted 9's musical video (1037 pages of investigation records)" and all of this part of the trial records (1037 pages of investigation records) led to the confession of the crime under this part of this case.

In full view of the evidence duly adopted by the court below, such as the confessions made by the defendant in the court of the court below and the prosecutor's office and the statements made by the prosecutor, etc., as above, since the defendant made a solicitation related to his duties to Non-Indicted 8, Non-Indicted 5, and Non-Indicted 6 through Non-Indicted 4, as stated in the judgment of the court below, it is sufficiently recognized that he provided money under the pretext of the case expenses, this part of the assertion is without any reason [Non-Indicted 5 was prosecuted as the fact that the above evidence for breach of trust was stolen and that it was finalized by the Supreme Court (Supreme Court Decision 2004Do4123 Decided October 28, 2004)].

(3) Violation of the Commercial Act and the false entry of the authentic copy of a notarial deed as stated in the holding of the court below (Defendant 1).

(A) Summary of this part of the facts charged and the judgment of the court below

The summary of this part of the facts charged is that the defendant, around May 14, 2001, borrowed KRW 2 billion from a person who has no intent to pay the amount of KRW 2 billion for the establishment capital of the Housing Bank located in Jung-gu Seoul, Jung-gu, Seoul, and then deposited KRW 2 billion in the above bank as if the defendant et al. paid the shares of the acquired shares, he deposited the total amount of KRW 2 billion in the above bank, issued a certificate of the custody of the shares from the above bank, and then, issued a certificate of the payment of shares from the above bank to repay the borrowed amount on the 15th of the same month, and the court below found the defendant guilty of this part of the facts charged in accordance with the evidence at that time.

(B) Judgment of the court below

① Comprehensively taking account of the evidence duly admitted by the lower court, the first Defendant started the production of the film theater under the name of the Defendant, along with Nonindicted 2, 10, and 11. Nonindicted 10, and Nonindicted 11 decided not to participate in the establishment of the company, against the Defendant’s opinion to engage in film production business; Nonindicted 2 did not seek to recover the amount invested in the company later, and decided to establish the company by making 50% investments in the company; on the other hand, the Defendant started the production of the film theater under the name of “(name omitted)” in which the company was not yet established; Nonindicted 20 million won was required to make investments in the film production cost; and Nonindicted 10 billion won was deposited in the company name of KRW 20 billion in the name of the said company’s office and the name of the said company’s office and the name of the said company’s company’s KRW 100 million, and the amount of the Defendant paid KRW 200 million in the name of the said company.

(2) The purpose of this crime is to regulate the act of disregarding the intent of the law that intends to lose the company's capital. Thus, in a case where a company's capital is paid in form or temporarily with due payment of stock price, and a bank is deposited with money and withdraws the paid money immediately after obtaining a certificate of payment of stock price and completing the registration of incorporation or the registration of capital increase after obtaining a registration of incorporation or a registration of capital increase, barring any special circumstance that the company used it for the company is not actually increased, the crime of false entry in the original deed of public capital and the crime of uttering of the original copy of an authentic deed is established as well as the crime of uttering of the original copy of an authentic deed of public capital (see Supreme Court Decision 96Do2904 delivered on February 14, 197).

However, according to the facts acknowledged above, even if the defendant and the non-indicted 2 invested KRW 1 billion in the production cost, etc. of the film theater before the establishment of the defendant 2 corporation, the remaining part of the 1 billion won exceeding it cannot be said to have been damaged by the defendant 2 corporation's capital adequacy, and there was no intention of the head of the household to pay. Although around October 21 of the same year, the defendant was subject to the reduction of the capital of the defendant 2 corporation around October 21 of the same year, or the defendant deposited money into the company as the loan, etc. after borrowing money from his wife non-indicted 1, etc., it does not affect the establishment of the crime as long as it is only a circumstance after the establishment of the company. Thus, the crime of provisional payment and the crime of false entry in the authentic copy of the authentic deed and the crime of exercising the original copy of the authentic deed cannot be established

(3) However, if promoters, etc. already invested capital in the company and formed the company's assets before the incorporation, it cannot be said that there was an intent to impair the company's capital adequacy (see Supreme Court Decision 80Do537, Apr. 13, 1982). According to the facts acknowledged earlier, the defendant and non-indicted 2 used for the defendant 2 corporation to be established by investing one billion won already in the "(name omitted)" and then, even if they have withdrawn the total amount of one billion won paid in the company immediately after the establishment of the company, it cannot be deemed that the defendant had an intention to make the best payment of the paid-in capital to the company for the remaining one billion won, and since there is no evidence to acknowledge the remainder of the charges of violation of trust as to each of the charges of violation of trust, the court below's conviction as to the remaining part of the charges of violation of trust as to the defendant cannot be found.

B. Determination on the assertion of unfair sentencing (Defendant 2 corporation)

In light of the various matters stipulated in Article 51 of the Criminal Act, such as the fact that the defendant voluntarily pays corporate tax of KRW 114,989,00, value-added tax of KRW 168,121,00 as a revised return to Samsung C&T on October 13, 2003 while being investigated after the crime of this case, and other matters under Article 51 of the Criminal Act, since the sentence of the court below is deemed to be too unreasonable, the above argument is well-grounded.

3. Conclusion

Therefore, since the defendants' appeal is well-grounded, the judgment of the court below is reversed in accordance with Article 364(6) of the Criminal Procedure Act, and it is again decided as follows.

The summary of the facts charged and evidence against the Defendants recognized as a member of the company is to be inserted in the last paragraph of Article 1-A of the facts constituting the crime of the judgment of the court below in the preceding part of Article 1-1 (a) of the facts constituting the crime of the court below, and "the portion exceeding KRW 1 billion invested before the incorporation of the company" is to be inserted in the preceding part of "the first paragraph of the judgment of the court below," and "the first day of the same month" in Article 1-1 (d) (2) (b) 1 of the Criminal Procedure Act is to read "the first day of the same year is to make contributions to the above program, etc.", "the first day is to be changed by making contributions to the above program, etc.", "the first day of the same year" in Article 369 of the Criminal Procedure Act is all the same as each of the corresponding columns in Article 369 of the Criminal Procedure Act.

1. Article applicable to criminal facts;

A. Defendant 1

No. 1 of the decision: Articles 628(1) and 622(1) of the Commercial Act

Article 228(1) of the Criminal Act

No. 1-B of the holding that the exercise of the original notarial deed: Articles 229 and 228(1) of the Criminal Act

Article 9 (1) 3 of the Punishment of Tax Evaders Act

No. 1-D. Each giving of breach of trust: Article 357(2) and (1) of the Criminal Act

B. Defendant 2 corporation

Articles 3 and 9 (1) 3 of the Punishment of Tax Evaders Act;

1. Selection of punishment (Defendant 1);

Each Imprisonment Selection

1. Aggravation of concurrent crimes;

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

1. Calculation of days of pre-trial detention (Defendant 1);

Article 57 of the Criminal Act

1. Suspension of execution (Defendant 1);

Articles 62(1) and 51 of the Criminal Act

Considering the degree of damage caused by the crime of this case, the motive and circumstance leading to the crime of this case, circumstances before and after the crime of this case, and other various matters provided for in Article 51 of the Criminal Act, which are conditions for sentencing, such as the defendant's age, character and conduct, environment, etc., the sentence imposed by the court below is too unreasonable, since it is deemed that the sentence imposed by the court below is too unreasonable, since it cannot be deemed that the sentence imposed by the court below is too unreasonable, since it is the case where the punishment imposed by the court below is too inappropriate, since it is the case where there is no provision of goods or services.

The summary of the facts charged against Defendant 1 in violation of the Commercial Act is as seen earlier. As seen earlier, as to the issue of a payment ledger in excess of KRW 1 billion among the facts charged, inasmuch as there is no proof of facts constituting a crime as seen earlier, a not-guilty verdict shall be rendered pursuant to the latter part of Article 325 of the Criminal Procedure Act, but as long as the court found Defendant 1 guilty of the violation of the Commercial Act

Judges Jeong Young-ok (Presiding Judge)