2016No490 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement),

Commercial Embezzlement

A

Both parties

Dagjin (Public prosecution) and in-depth trial (public trial)

Law Firm AL, Attorney F

Daegu District Court Decision 2015Gohap53 decided August 18, 2016

May 25, 2017

All appeals filed by the defendant and prosecutor are dismissed.

1. Summary of grounds for appeal;

A. Defendant

1) Despite the following circumstances, the lower court convicted him of this part of the facts charged, which erred by misapprehending the legal principles or by misapprehending the legal principles, which affected the conclusion of the judgment.

① The lower court acknowledged that the Defendant and I’s statement made by J, S, and K in the lower court court as evidence of guilt and violated the rules of evidence in order to reject the part consistent with the Defendant’s assertion, terminate the investigation at an early stage, and protect H with good health.

② In addition, a person who kept and operated the funds of G Co., Ltd. (hereinafter referred to as “G”) operating a “N” golf course (hereinafter referred to as “instant golf course”) was the J at the time of the representative director, and the Defendant was not in the position of a custodian for G.

③ Furthermore, the Defendant’s wife as the president of G, was in charge of advisory and decision-making on the interior of the instant golf course, possession of furniture and props, education of employees, etc., and received benefits in return therefor. As such, the Defendant’s wife did not embezzled G’s property by granting benefits to H.

(ADI provided a joint and several surety at the time when G was granted a loan of KRW 8 billion from the Forest Savings Bank, and the money paid to I in the form of monthly salary is in the nature of the consideration for the said joint and several surety. In light of the economic benefits accrued from the above loan, G cannot be deemed to have actually suffered damage to G with payment of the above money to I, and it shall not be deemed that the defendant has an intention to acquire unlawful acquisition in the crime of embezzlement.

⑤ Even if the Defendant took part in the act of occupational embezzlement by the representative director, the Defendant, who is not a non-identification, shall be punished as embezzlement simply.

2) Unreasonable sentencing

In light of the various sentencing conditions of the instant case, the sentence imposed by the lower court (two years of imprisonment, three years of suspended execution) is too unreasonable.

(b) Prosecutors;

1) 사실오인 또는 법리오해 [원심 판시 ㈜U 및 X㈜에 대한 각 업무상 횡령의 점 무죄 부분 관련] 주식회사 U(이하 'U'이라 한다)에 대한 업무상 횡령의 점과 관련하여, 피고인과 I는 수사기관에서 피고인이 U의 실제 운영자이고 I가 U의 직원으로 근무한 적이 없다고 진술하였으므로, 피고인은 I를 형식상 이사로 등재한 후 급여를 지급하는 방법으로 위 회사의 재산을 횡령한 사실이 충분히 인정된다.

In relation to the embezzlement of X Co., Ltd. (hereinafter “X”), in full view of the fact that most of the money paid to H as salary is used by the Defendant, and the Defendant formed funds through H, the fact that the Defendant formally listed H as auditor and then embezzled the company’s property by paying wages is sufficiently recognized.

Nevertheless, the lower court rendered a not-guilty verdict on all the facts charged. In so doing, the lower court erred by misapprehending the legal doctrine, thereby adversely affecting the conclusion of the judgment.

2) Unreasonable sentencing

In light of the various sentencing conditions in the instant case, the sentence imposed by the lower court is too uneasible and unfair.

2. Determination

A. As to the assertion of mistake of facts or misapprehension of legal principles

1) Determination on the Defendant’s assertion

A) Whether the witness of the court below violated the rules of evidence concerning the statement by J et al.

In a case where the appellate court recognizes that there exists a ground for appeal, the appellate court may determine the credibility of the testimony without re-examination of the witness examined by the first instance court and only the statement in the protocol thereof. However, in light of the principle of court-oriented trial and the principle of direct examination, the contents of the first instance court and the evidence duly examined in the first instance court, there are special circumstances to deem that the first instance court clearly erred in the determination on the credibility of the statement made by the witness of the first instance, or in light of the results of the first instance court's examination and the results of additional evidence examination conducted by the time of closing argument, it is clearly unreasonable to maintain the first instance court's determination on the credibility of the statement made by the witness of the first instance on the ground that the first instance court's determination on the credibility of the statement made by the witness of the first instance differs from the appellate court's determination (see, e.g., Supreme Court Decisions 91Do1672, Oct. 22, 191; 2005Do16364, Nov. 26, 19654>

In addition, the preparation of evidence and the fact-finding belong to the exclusive authority of the fact-finding court unless they violate the rules of evidence, and there is no rule of law that the same person's testimony and testimony in the court are different from that in the same investigation agency. Thus, even if the facts of the crime are acknowledged by reliance on the testimony in the court of the same person and the statement in another investigation agency, it is not illegal (see, e.g., Supreme Court Decision 86Do1547, Sept. 23, 198).

In light of the above legal principles, there is no circumstance to find out that the lower court’s determination that the Defendant and I’s investigative agencies as well as J, S’s partial statement, and K’s partial statement at the lower court as seen in the Defendant’s assertion was erroneous, or that it was remarkably unfair to maintain it as it is, in light of the above legal principles. Accordingly, the Defendant’s allegation in the grounds of appeal in this part is without merit.

① Rather, at the Daegu District Court on May 30, 2008, the Defendant and the J made a final judgment of conviction on the facts constituting a crime that “The Defendant and the J, as the actual owner of G, have an overall control over the management of the Company, and the J, as the representative director of G, conspired with each other to manage the Company’s business in general, and conspired to use the Company’s debt repayment, etc. by raising the funds in excess of the construction cost of the golf course being executed by G and receiving a refund of the part thereof.” In light of the relationship between the Defendant and the witness and the J, the actual operator of G’s judgment of the J is difficult to believe the Defendant’s legal statement at the lower court.

② Also, on March 15, 2012, G, which is close to the date of the instant crime at an investigative agency, made a statement corresponding to the facts charged in the instant case to the effect that S was the Defendant, and the lower court’s testimony was made on July 14, 2016, when four years or more elapsed since the date of the instant crime. The lower court’s statement was merely an employee and was given instructions from the representative director and was not given direct instructions from the Defendant. As such, it does not mean that the statement made at an investigative agency was false. Therefore, it is difficult to readily conclude that the said statement was a testimony consistent with the Defendant’s assertion. Therefore, it is difficult to deem that the lower court rejected the said statement made by S without any justifiable reason, consistent

Furthermore, the Defendant alleged to the effect that “K paid the money to K (G) is partially paid to K, and this is that K has paid the money to K with the loan of KRW 100 million, which is in violation of the rules of evidence at the lower court’s rejection of the credibility of the statement made by K investigation agency, but I began to receive money from G from April 23, 2004, the date on which K commenced to receive the payment as the representative director, and that the sum transferred from G to I and the passbook does not coincide with the actual receipt amount of K in the wage list (Evidence 957 of the record of evidence record), it is difficult to believe this part of the statement made to the investigation agency that K paid part of the amount of monthly salary as a payment for the payment of the monthly salary (Evidence 957 of the record of evidence).

④ In addition, the part acknowledged by the lower court as evidence of guilt in relation to the embezzlement of G among the statements made by the Defendant and I is consistent with the objective facts acknowledged by the previous conviction, etc., as seen below, and the Defendant and the investigative agency appear to have no particular circumstances to deny the voluntariness of the statement when the Defendant and the I make a statement as above, it is difficult to readily conclude that this part of the statement made by the Defendant and 1 is a strategic confession.

B) Whether the status as an occupational custodian is recognized

In the crime of embezzlement, the custody of property means the state of actual or legal control over the property and the custody thereof must be based on the consignment relationship. However, it is not necessarily required to be established by a contract such as loan for use, lease, delegation, etc., and may also be established by the principle of good faith. In addition, in a case where a shareholder, a representative director, or a person in charge of actual affairs related to the custody or operation of the company's funds disposes of the company's property for private purposes, such as providing the company's property as a collateral for a third party's financing, the company's liability for the crime of embezzlement may not be exempted, regardless of whether there was a resolution of the general meeting of shareholders or the board of directors on such disposal (see, e.g., Supreme Court Decision 2010Do17396, Mar. 24, 2011).

In light of the above legal principles, it is reasonable to view that the Defendant is in the position of a person who keeps G property in full view of the following circumstances acknowledged by the lower court and the evidence duly admitted and examined by the lower court. Therefore, the Defendant’s ground for appeal on this part is groundless

① Around February 2002, 51% of the shares issued by G was transferred in the name of Defendant’s wife H, 39% was transferred in the name of Defendant’s wife M, and the remaining 10% was transferred in the name of Defendant’s wife. At the time, the acquisition price was KRW 3.5 billion. M was about KRW 24 years, L was about KRW 29 years, and there was no sufficient means to pay the acquisition price. The Defendant was operating several companies at the time, and the said shareholders were both the Defendant’s wife and children, and were in the family relationship, it appears that the Defendant actually paid the acquisition price and taken over G.

② On August 20, 2015, the Defendant received G from the prosecutor’s office on the first half of 200, and stated that “B was in fact managed by the Defendant,” and “B was in the presence of the J representative director and the director as vice-chairperson, and thereby, H was paid the monthly salary.” The Defendant instructed this to pay H’s monthly salary at an appropriate line.

③ In addition, the Defendant, who was aware of, and was investigated by the prosecution, stated that G was the Defendant.

④ At the time S worked in G stated in the prosecutor’s office that “S is not an official position because it does not actually work in G, but the Defendant has the position of the president of G and H having the position of the vice president of G, and the employees are also aware of it”, and “I are aware of the fact that the Defendant’s family members hold 10% of G shares and accordingly, the actual owner of G is the Defendant, who is the president.”

⑤ On May 30, 2008, the Defendant is a person who actually and actually decides on the management of the company. From around April 8, 2004 to November 24, 2005, in collusion with J and 0, the Defendant appropriated an excessive amount of construction cost, etc., for 31 times in total, 1,075,15,000 won, and embezzled an aggregate of 245,296,290 won from January 6, 2006 to June 9, 2006, by taking into account the following factors: (a) from around 2004 to from November 24, 2005, the Defendant was deemed to have contributed to 20 years of imprisonment with labor; (b) from around 2006 to the 20th day of 20th day of 20 years of the enforcement of the sentence; and (c) from the 3rd day of 3rd day of 3rd day of 20 years of ar’s commission or payment method.

In light of the above legal principles, comprehensively taking account of the following circumstances acknowledged by the evidence duly adopted and examined by the health team, the court below, and the court below, it is reasonable to deem that the Defendant’s act of appointing H as the vice-chairperson of G and allowing G to pay wages to H constitutes occupational embezzlement as the act of clearly lacking the necessity or legitimacy of commissioning H as the vice-chairperson, or the paid benefits significantly deviates from a reasonable level. Accordingly, the Defendant’s allegation in this part of the grounds for appeal is without merit.

① The fact that H received benefits from G from September 23, 2005 to January 25, 2012 is because he/she was in the position of the vice-chairperson. However, it appears that H did not have a resolution of the general meeting of shareholders of G who is appointed as a director of G, and rather, the Defendant appointed H as a vice-chairperson and ordered H to pay a monthly salary. Accordingly, H is not recognized as a right to demand remuneration under Article 388 of the Commercial Act.

② H did not actively participate in the management of G, and H did not regularly attend the G office, and H did not have an individual office at the G office, and H did not exercise the authority to approve with respect to various duties of G (G’s articles of incorporation seems to have no provision recognizing “the vice-chairperson” as its executive officers).

(3) The Defendant alleged that H had conducted the duties such as consultation and decision-making with respect to the instant golf club b, internal and external interior and external interior and exterior interior interior of the instant golf club before the instant golf club opening. After the instant golf club opening, the Defendant took charge of consultation and decision-making with respect to the instant golf club, possession of furniture and various props, education for employees, etc., and the overall interior and sanitary checkup of the club clubs and guest rooms, and other overall checkup of food and service provided to the users, conducting interviews with female gys, checking and advising employees’ working conditions, attracting customers, customer interviews, and attending meetings on the above matters. However, it appears that H did not have any special ability to perform such duties, in light of the fact that H was difficult to view that the amount of benefits paid to H before the opening of the instant golf club was considerably higher than that paid to the representative director of G, and that the amount of benefits paid to H was considerably higher than that of the Defendant’s spouse’s total amount of benefits paid to H during the instant golf club opening opening to the extent of Grade 2010.

D) Comprehensively taking account of the following circumstances acknowledged by the lower court and the evidence duly admitted and investigated by the first instance court as to whether the crime of embezzlement related to the payment of benefits to I (the intention of unlawful acquisition and the occurrence of damage (the claim for deduction or set-off) was established, the Defendant embezzled G’s property by having the intent of unlawful acquisition and payment of money in the form of payment to I, and thereby sufficiently recognize the fact that the damage was caused to G. Accordingly, the Defendant’s allegation in this part of the grounds for appeal is without merit.

① Although the Defendant asserted that he had the right to claim remuneration as an auditor of G, G did not have any way to pay money as an auditor ( there was no entry of the details of payment of I in the G’s benefit ledger). I also stated in the court of original instance that “I would make a decision on the payment of money to the representative director at the time, because I did not receive wages from the G, but did not receive wages from the G, and the representative director at that time had been jointly and severally guaranteed. I would receive money in the form of payment.”

② Around 2004, G was granted a loan of KRW 8 billion from the Forest Savings Bank, and T and J also, a stock company and J, the representative director of which were the above loan debt. As above, the joint and several liability as above, is due to the relationship with the defendant or its affiliated companies, etc., and there is no evidence to deem that the defendant or its affiliated companies have fulfilled the joint and several liability obligation. As long as there is no evidence to deem that G performed the joint and several liability obligation, G has no reason to pay the above money of KRW 200,000 per month to G solely on the ground that 1 has performed

③ Even if embezzlement is recognized in relation to the money paid from G, the Defendant asserts that, at the same time, the role as auditor in G as well as the profits arising from the joint and several surety for the obligation of loans of KRW 8 billion should be calculated and offset or deducted from the Defendant’s embezzlement amount. However, there is no legal ground for offsetting or deducting the above profits from the Defendant’s embezzlement amount.

E) Whether the crime of simple embezzlement should be punished

Under the premise that the principal agent of the act of occupational embezzlement in this part is J, even if the defendant was involved in the act of occupational embezzlement by the representative director, he is non-identification crime even though he was involved in the act of occupational embezzlement

Although the defendant asserts that it should be punished as simple embezzlement, the subject of the above occupational embezzlement is the defendant who has actually exercised the right of management as the chairperson of G, and the defendant also has to be punished as the representative director by the investigation agency and the defendant is not paid monthly wage as the president because he has worked as the president in the investigative agency, but has not been paid a large amount of debts and has not been paid a certain amount of expenses in the broadcasting station due to the bankruptcy, and there is no cost that he could not receive these expenses in the broadcasting station. Accordingly, the defendant would be able to receive monthly salary in the name of I after consulting 0 representative directors of G who manage the entire company's funds by the defendant with the 0 representative director who is appointed as the vice-chairperson and ordered him to pay the monthly salary of H." In full view of the above, the defendant's argument that this part of the defendant's appeal should not be accepted.

F) Sub-decisions

Thus, the fact-finding by the court below that found him guilty of embezzlement of G and the facts charged

The judgment is just and acceptable, and there is no error of law by misunderstanding facts or by misunderstanding legal principles as pointed out by the defendant, which affected the conclusion of the judgment. Therefore, the defendant's ground of appeal on this part is without

2) Determination of the Prosecutor’s assertion

A) Summary of this part of the facts charged

(1) Occupational embezzlement against the victim U.S.

As a substantial representative of U.S., the Defendant had a duty to use the above company’s operating fund for the said company.

The Defendant, who is not an employee of U, pretended to pay normal wages to his children who are not an employee of U, in order to embezzled the amount equivalent to his wages.

From April 25, 2006 to May 25, 2009, the Defendant deposited total of KRW 123,576,927 won in one account in the name of benefit name as shown in attached Table 2 of the judgment below from April 25, 2006 to May 25, 2009, and embezzled funds of the victim by arbitrarily receiving it in cash and using it.

(2) The occupational embezzlement of the victim X

As a substantial representative of the victim X, the Defendant had a duty to use the above company’s operating fund for the above company.

The Defendant, by appointing his wife H as X’s auditor, had the intent to embezzled the amount equivalent to the benefits, by pretending that the Defendant would pay normal benefits.

From February 26, 2007 to October 11, 2010, the Defendant deposited total of KRW 211,684,270 over 40 times in H’s account as shown in attached Table 3 of the crime sight table attached to the lower judgment, deposited total of KRW 211,684,270 into H’s account as benefit name, and then wrongfully used it by delivering it in cash, and embezzled funds of the victim.

B) The judgment of the court below

In full view of the following circumstances acknowledged by the evidence duly admitted and examined by the lower court, the lower court acquitted the Defendant on this part of the facts charged on the ground that the act of paying benefits to U and X solely based on the evidence submitted by the prosecutor cannot be deemed to constitute embezzlement.

[U-Related]

① On May 22, 2003, U was established in U.S.A. Around that time, 70% of U’s shares was acquired during U’s establishment. Around that time, U.S. director was appointed. However, a corporation should have at least three directors in principle pursuant to Article 383(1) of the Commercial Act (Article 383(1) of the Commercial Act amended by Act No. 9746, May 28, 2009). A corporation with a total amount of less than one billion capital could have one or two directors, and the said total amount of U’s capital was KRW 50 million until the said amendment. 1 was appointed by U.S. director, the total amount of U’s capital at the time of U’s appointment was KRW 1 billion), and I, who was appointed by U.S. director around May 2003, had the right to claim compensation and the duty to demand compensation under Article 381 of the Commercial Act.

② As U’s director from April 25, 2006 to May 25, 2009, it appears that he received benefits as shown in the attached list 2 of the crime list attached to the lower judgment. However, this is the U’s director from February 25, 2007 to April 2009, who exercised his voting right on the agenda of the board of directors (such as lending money, lending money, purchase of stocks, etc.) and bears the authority and duties as a director under the Commercial Act, and the responsibility for the violation thereof.

【X-related】

① On March 14, 2007, H assumed office as X’s auditor and retired from office on March 31, 2013. However, in the case of a stock company, it is required to have an auditor as a permanent institution under the Commercial Act (in accordance with Article 409(4) of the Commercial Act amended by Act No. 9746, May 28, 2009, small-scale stock company whose capital is less than one billion won can not appoint an auditor). H, by taking office as X’s auditor around March 2007, offered the basis necessary for establishing and operating X as a social entity, as X’s institution, and was responsible for breach of duties with the authority and duties under the Commercial Act as auditor.

In addition, even if H was the nominal auditor X, it is reasonable to view that H had the right to claim remuneration under the Commercial Act against X.

② As an auditor, H appears to have received benefits from February 26, 2007 to October 11, 2010. However, H’s defense counsel received food materials in X and directly examined food materials and conducted business instructions, supervision, and supervision to X employees. He supplied food materials to X for five years from January 26, 2007, stating the following: (i) a written confirmation (Evidence 7 submitted by his defense counsel at the lower court) of AA (which is a person in charge) stating that H had been supplied with food materials in X; (ii) a prosecutor did not submit evidence to verify that H had no material performance of duties as an auditor or employee in X.

C) The judgment of this Court

Under the law, directors and auditors who have the status of directors and auditors, but do not perform substantial duties as directors and auditors pursuant to the explicit or implied agreement with the company, are also corporate entities, which provide the foundation necessary for the company to establish and act as a social entity, as well as bear the responsibility for breach of obligations with the authority and obligations prescribed by the Commercial Act. Thus, inasmuch as judicial control over excessive remuneration is not different from general directors and auditors, barring special circumstances, such as that the company is appointed as directors and auditors by means of solely paying remuneration in the form of payment of remuneration, barring special circumstances, such as the company’s appointment of individuals and auditors as a means to pay the company’s funds (see Supreme Court Decision 2014Da236311, Jul. 23, 2015).

In light of the above legal principles, U was established around May 2003 and X was paid benefits since April 2006, and since February 2007. The payment period of the above benefits is equal to the period that the defendant was investigated by the prosecutor's investigation and did not participate in the management from the time of the investigation as stated by the court below. The nominal director and the auditor has the right to claim remuneration even if he was selected and appointed a director or an auditor only in the form of payment of remuneration, and there was insufficient evidence to prove that the defendant was not guilty and there was no other evidence to acknowledge it. Thus, the court below's determination on this part of the court below did not err in the misapprehension of legal principles as it did not err in the misapprehension of legal principles as seen above.

B. Examining the various sentencing conditions in the instant case on the assertion of unfair sentencing by the Defendant and the prosecutor, the following circumstances are favorable to the Defendant: (a) at the time of the instant crime, G was practically one company of the Defendant or a company by the Defendant’s family members; (b) the Defendant returned a total of KRW 790 million to G to return most damaged damage; and (c) the Defendant did not want to punish the Defendant; and (d) the Defendant is the age of 74 years old. Meanwhile, the instant crime is a person exercising the substantial management right of the victim G; (b) the Defendant, who was a person exercising the substantial management right of the victim G, was the vice-chairperson; (c) he embezzled the amount of wages of KRW 790 million,00,000,000 as he would have paid a considerable amount of wages after appointing I as the auditor; and (d) the Defendant’s act may cause damage to the creditors of G; and (c) the Defendant’s financial soundness and transparency in the financial structure; and (d) the Defendant is subject to imprisonment with prison labor for two years (2006).

As above, comprehensively taking into account all the sentencing conditions in the records and arguments of this case, such as the Defendant’s age, character and conduct, environment and family relation, motive and background of the crime, method of the crime, the status of the Defendant at the time of the crime, and circumstances before and after the crime, etc., which are favorable or unfavorable to the Defendant, and the lower court appears to have sentenced two years of imprisonment and three years of suspended execution to the Defendant within the scope of recommended punishment (one year to six months of imprisonment) set forth in the sentencing guidelines, taking into account the aforementioned sentencing factors, and even if there are no special circumstances or changes in circumstances that make it possible to change the sentence of the lower court in the trial, the sentence imposed by the Defendant is acceptable as it is within the proper scope of punishment according to the Defendant’s liability, and it is not recognized that it is too heavy or unreasonable.

Therefore, the grounds of appeal by the defendant and prosecutor disputing unfair sentencing are without merit.

3. Conclusion

If so, the appeal by the defendant and the prosecutor is groundless, and therefore, Article 364 (4) of the Criminal Procedure Act.

All of them are dismissed.

Application to the presiding judge;

Judge Lee Jong-soo

Judge Doo

1) The Defendant’s defense counsel held that the lower court was the prosecutor’s statement in K’s other cases as evidence of guilt; however, according to the evidence list, regarding the instant case.

In addition to the prosecutor's protocol made at his/her office on February 11, 2015, K's 2015, 1, 13, and 11, 2015, the statement of other cases is not submitted as evidence.

In addition, the court below did not find any circumstance to acknowledge that the statement of the other case K was used as evidence as claimed by the defendant (However, the court below did not find that it was used as evidence)

In the judgment of the court below, it is clear that the "2005" in the corresponding part (12) is a clerical error of "2015".