Defendant

Prosecutor

The two-wheeled iron bars (prosecutions, public trials), protein type, Kim Jong-type, and Lee Young-young (public trial)

Attorneys Noh Byung-hun et al.

Seoul Central District Court Decision 2012Gohap261 Decided January 25, 2013

The prosecutor's appeal is dismissed.

1. Summary of the grounds for appeal (legal scenarios, mistake of facts, etc.);

According to the evidence submitted by the prosecutor, the facts charged in this case can be fully recognized. Nevertheless, the judgment of the court below which acquitted the defendant shall be reversed as falling under subparagraphs 1 and 14 of Article 361-5 of the Criminal Procedure Act.

2. The facts charged

(a) Defendant and related persons;

From May 1978, the Defendant was a major shareholder of Nonindicted Co. 11 (former ○○○○ Co., Ltd. and changed the name of the corporation to △△△△△, Nonindicted Co. 11; hereinafter “Nonindicted Co. 11”) and the president of Nonindicted Co. 12, Nonindicted Co. 13, Nonindicted Co. 14, and Nonindicted Co. 15, who are in office as the chairperson of Nonindicted Co. 11, including Nonindicted Co. 12, Nonindicted Co. 13, Nonindicted Co. 14, and Nonindicted

Nonindicted 4 and Nonindicted 3 are the defendants' children.

(b) Changes in and donation of stock ownership relationships;

On May 1, 1978, the Defendant accepted ○○○○ Co., Ltd. and changed the name of the corporation to △△△△△△△△△, and thereafter reported the changes in the shares under the provisions of the Corporate Tax Act, the Defendant filed a report with the competent tax office that the Defendant owned 25,075 shares (29.5%), Nonindicted 16 Nonindicted 8,50 shares (10%) (17), 10,625 shares (12.5%) of the Defendant’s wife, Nonindicted 18, 180 shares (10.0%) 16,150 shares (19.0%) and Nonindicted 20 reported to the competent tax office that the Defendant owned 16,150 shares (19.0%).

Of the above shares, Non-Indicted 1’s shares 2), Non-Indicted 4,960 shares 4,960 shares of Non-Indicted 18, and Non-Indicted 2’s shares 3), Non-Indicted 5,640 shares 5,640 shares of Non-Indicted 1 and Non-Indicted 2 were owned respectively at the competent tax office (hereinafter “the shares of this case,” including the shares of Non-Indicted 2 and Non-Indicted 1 and the shares incidental thereto).

As a result of the National Tax Service’s investigation conducted from May 1, 1998 to August of the same year, it was revealed that the shares held by Nonindicted 2 and Nonindicted 1 are the Defendant’s title trust shares, and on December 22, 1998, the Defendant reported the conversion of the name of the actual owner of the shares into the name of the Defendant in the Rome Tax Office, and on December 1, 1998, the Defendant reported that the shares held in title with Nonindicted 1 and Nonindicted 2 were transferred to the name of the Defendant of the actual owner on December 1, 1998.

On September 204, 2004, Nonindicted 2 and Nonindicted 1 as the Plaintiff, and Defendant 4 as the Defendant, filed a lawsuit claiming the return of stocks, and filed a report to the National Tax Service in accordance with the ruling of constructive confession, and changed the name of Nonindicted 2 and Nonindicted 1 inside and outside of the company, such as the resolution of the general meeting of shareholders.

On July 9, 2008, Nonindicted Co. 11 reported the correction of name in the name of Nonindicted Co. 4 and Nonindicted 3 with respect to the above stocks listed on June 8, 2006 and trusted in title under Nonindicted Co. 2 and Nonindicted 1’s name, and reported it to the Korea Securities and Futures Exchange on the same day, and then, on July 14, 2008, deposited the real share certificates into Nonindicted Co. 4 and Nonindicted 3’s account in the name of Nonindicted Co. 21.

Accordingly, the above shares were delivered to Nonindicted 4 and Nonindicted 3 on July 14, 2008, and they acquired the status as a de facto shareholder who can exercise the rights as a shareholder, and thus, it is deemed that they were donated to Nonindicted 4 and Nonindicted 3 on the above day.

C. Representation of all legal acts with respect to the shares of this case

When the Defendant donated the stocks, etc. of Nonindicted Company 11 to Nonindicted 4 and Nonindicted 3, and as he was unable to manage his assets on his own due to such reasons as the student status, military service, or his long-term stay in a foreign country due to his long-term stay, etc., the Defendant has been acting on behalf of the Defendant for all legal acts, such as payment of various taxes related to the share transfer, purchase and sale of securities such as stocks, etc. or real estate, receipt and disposal, etc.

(d) Donations by fraud or other unlawful means; and

1) The ownership of the instant shares

As described earlier, the Defendant owned the above shares on May 1, 1978, and thereafter, continued to have been the owner of the instant shares until July 14, 2008 to the delivery to Nonindicted 4 and Nonindicted 3.

Around December 1998, the Defendant reported the cancellation of title trust and real name conversion of the shares held in title trust to Nonindicted 2 and Nonindicted 1, the Defendant indicated that the shares held in title trust were owned by the Defendant through a resolution of the general meeting of shareholders and the settlement of accounts, etc.

In addition, with respect to the shares of this case, Nonindicted 4 and Nonindicted 3 did not exercise all the rights to exercise shareholders’ rights, such as the exercise of shareholders’ voting rights, exercise of the right to demand dividend, dividend, and allotment of new shares.

(2) fraud and other unlawful means

In the process of preparing the listing of Nonindicted Company 11 in around 2004, when it was anticipated that the gift tax will be levied on Nonindicted Company 4 and Nonindicted 3 in the event that shares were donated to Nonindicted Company 11 or after the listing of shares, the Defendant used that the shares of the instant case were managed in the name of Nonindicted Company 1 from March 1, 1991 to March 9, and from March 9, 194 in the name of Nonindicted Company 2 from March 1, 1991, and that the shares of the instant case were managed in the name of Nonindicted Company 3 and Nonindicted 4 from March 9, 194. Despite the fact that the said shares were owned by the Defendant, Nonindicted Party 3 and Nonindicted 4 were pretended to have been holding from around 191 and 194, with the intention to evade gift tax by asserting the progress of the exclusion period

Accordingly, around September 24, 2004, the Defendant prepared a complaint to the effect that “The Defendant did not pay the purchase price under the agreement and thus the sales contract was terminated, the Defendant returned 56,400 shares and 49,600 shares to the Plaintiff Nonindicted 2 and Nonindicted 1, and that “the transfer registration procedure shall be implemented in the name of the Plaintiffs,” and filed a lawsuit with the Seoul Central District Court along with the false agreement, peremptory notice, and notification note 9). On December 14, 2004, the Defendant obtained a favorable judgment from the above court in favor of the Plaintiff due to the constructive confession from the Defendant’s absence, and changed 56,40 shares out of the shares in the name of the Defendant to Nonindicted 2, 49,600 shares in the general meeting of shareholders and the report on settlement of accounts, etc., respectively.

In addition, on December 1, 2004, the Defendant directed Nonindicted 22, etc., and written, around March 1, 1991, a false promise letter with Nonindicted 1, in the name of Nonindicted 1, that Nonindicted 1 was a title trust for the said borrowed stocks from Nonindicted 3, and around December 2, 2004, a notary public made, respectively, a false promise letter with Nonindicted 2, the purport that Nonindicted 2 was a title trust for the said borrowed stocks from Nonindicted 4, at the ○○ General Law Office, on March 9, 1994.

Around April 2008, the Seoul regional tax office conducted a tax investigation on Nonindicted Company 11 in the Seoul regional tax office, and the Defendant, through Nonindicted Company 11’s employees, submitted to Nonindicted Company 4 and Nonindicted 3 a false statement of commitment, false list of shareholders, and false share certificates, alleging that the instant shares were already donated to Nonindicted 4 and Nonindicted 3, both of which were the two children, around 1978.

On June 5, 2008, Nonindicted 2 and Nonindicted 1 sent a content-certified mail demanding the change of the name of the said shares in the name of Nonindicted 4, etc., but did not comply therewith, on July 9, 2008, filed a lawsuit seeking confirmation of the existence of the shareholder’s abandonment and the transfer performance claim with the Seoul Central District Court Act.

On July 9, 2008, the Defendant submitted a written application for correcting the name of the instant shares in the name of Nonindicted Party 2, Nonindicted Party 1, and Nonindicted Party 4 and Nonindicted Party 3 in the name of Nonindicted Party 3.

On July 14, 2008, Nonindicted 4 and Nonindicted 3 received delivery of each of the above sovereignty reals and stored them into the account of Nonindicted Company 21.

The Defendant filed a false lawsuit as above, and submitted false data to the National Tax Service. On July 14, 2008, the instant shares were owned by the Defendant. On July 14, 2008, the Defendant donated Nonindicted 4, 868,000 shares (total market price of KRW 38,418,975,00) to Nonindicted 4, and Nonindicted 4, 868,900 shares (total market price of KRW 33,786,900,00) to Nonindicted 3, without reporting the tax base and tax amount under the Inheritance Tax and Gift Tax Act by pretending that Nonindicted 4 and Nonindicted 3 convert the nominal shares donated in the year 1978 into the real name of each real owner, and thereby making it considerably difficult to impose and collect taxes on a permanent basis or making it considerably difficult to do so through fraudulent means or other fraudulent means, 306,478,47,47,700 through active act, etc.

3. Summary of the judgment of the court below

The lower court acknowledged the facts as indicated in its reasoning as to the summary of Nonindicted Company 11, the process of changing the shareholder name by the shareholders' list, the process of reporting the conversion of shareholders' names by the shareholders' list, the preparation of Non-Indicted 2 and Non-Indicted 1's false lawsuit filing and notification letter, the details and contents of the shareholder list and share certificates submission, the process of the tax investigation in 2008 and the result thereof, the progress and result of the tax investigation in 2011, and the result thereof, and found the Defendant not guilty on the following grounds.

(a) Specifying the act in a fraudulent and unlawful manner;

In the facts charged of this case, “Fraud and other unlawful act” refers to the act of submitting a false stock list and stock certificates in the tax investigation conducted by the Seoul Regional Tax Office on or around September 24, 2004 by the Defendant with the Defendant as the Defendant himself under the name of the Plaintiff 2 and Nonindicted 1. On or around April 2008, the Defendant submitted a false stock certificate under the name of Nonindicted 2 and Nonindicted 1 along with the false stock certificate. Of this, the lawsuit seeking a false stock return in 2004 was merely the preliminary stage of the crime, and was already revealed in the Seoul Regional Tax Office’s tax investigation in 2008. Thus, the continuity of the lawsuit seeking a false stock return in the name of Nonindicted 2 and Nonindicted 1 was severed. Since the submission of false stock certificates in the name of the Plaintiff 2 and Nonindicted 1 is incidental to supporting the shareholder registry and stock certificates in this case, the core in the facts charged of this case is that the Defendant submitted the false stock certificates and the Seoul Regional Tax Office around April 23, 2008.

In the above “false shareholder registry or false share certificate” does not mean that the “false” does not coincide with the substantive legal relationship, but it is understood that the Defendant prepared the instant shareholder registry and share certificate at any time from March 1, 1991 to April 22, 2008 with the intent of the Defendant to donate the shares to children, and operated it as if it were prepared in accordance with the flow of time from March 1, 1991 to April 206.

B. Whether the shareholder registry and share certificates of this case are false

① The shareholder registry of this case was not submitted to the court of the court below, and only a copy was examined, and it appears that the external appearance was hard to use it as it was (such as the part made by the person in form, and the part made by himself). ② The writing of the shareholder registry of this case was changed over three times even if it was in land, and the defendant first prepared in 1991, and Non-Indicted 6, Non-Indicted 6, Non-Indicted 6, and Non-Indicted 7 did not have any reason to believe that the defendant was not liable for the above fact-finding after 194, Non-Indicted 8, Non-Indicted 6, and Non-Indicted 7, Non-Indicted 8, Non-Indicted 9, Non-Indicted 7, Non-Indicted 9, Non-Indicted 8, Non-Indicted 6, and Non-Indicted 7, Non-Indicted 9, Non-Indicted 8, and Non-Indicted 8, Non-Indicted 9, Non-Indicted 1, 208.

C. Review of indirect facts by the prosecution

Even if the court of the court below did not directly investigate the original shareholders' list and the original stock certificates of this case, it is insufficient to acknowledge that: ① the reversal or contradiction of the statement made by the defendant, the non-indicted 5, and the non-indicted 7 with regard to the preparation process of the shareholders' list of this case; ② the conclusion that the appraiser of the Korean Institute of Scientific Investigation Planning was presumed to be 191 as the result of the appraisal of documents in the shareholders' list of this case; ③ all shareholders and stock-related affairs of the non-indicted 11 were handled only by the shareholders' list of the non-indicted 20 and the non-indicted 29 were found to have been issued on March 29, 2008; ④ the fact that the non-indicted 2 was found to have been issued on the date when the shareholders' list of this case was issued on the non-indicted 10 and the non-indicted 2 was not issued on the non-indicted 98's real name as the date when the shares were issued on March 29, 2005.

4. The judgment of this Court

The evidence that there is a criminal fact in the criminal procedure shall be presented by the prosecutor, and even if the defendant's indictment is unreasonable and false, it shall not be disadvantageous to the defendant, and the criminal facts must be proven by the judge so that the judge can have a high probability beyond reasonable doubt, and if there is no evidence to establish such a degree of conviction, even if there is suspicion of guilt against the defendant, it shall be judged as the benefit of the defendant (see Supreme Court Decision 2007Do163, Nov. 30, 2007, etc.).

In light of the above legal principles, the fact-finding and judgment of the court below are justifiable. Furthermore, even in full view of the following circumstances admitted by the court below and the evidence duly adopted and investigated by the court below, it is not sufficient to conclude that the shareholder registry and share certificates of this case were fabricated by the defendant since 2004, and there is no other evidence to prove otherwise, the court below acquitted the defendant. The prosecutor's grounds for appeal are without merit.

1) On December 22, 1998, a “report on conversion of the name of the actual owner of shares or equity shares” prepared in the name of the defendant to the head of the Guro Tax Office was submitted. At the bottom of the report, the personal seal is affixed to the defendant’s name. The documents required that “the defendant trusted the shares of this case to the next-name shareholder.” The certificate of title trust was submitted on December 19, 1998 under the name of the defendant. At the bottom of the report, the personal seal is affixed to the name of the defendant and that of the other defendant whose name was affixed the seal on the report on conversion of the name of the defendant. At the time of the report on conversion of the name of the shareholder on December 22, 1998, Nonindicted 5, who worked at Nonindicted Company 11’s re-registration team, stated that the personal seal of the defendant’s name affixed on the above certificate of title trust was not known at the court of first instance, and Nonindicted 24, who was working as the chief of the secretary, was 0 or 20’s personal seal.

2) At the time of the investigation on the change of shares conducted from May 28, 1998 to September 22, 1998, Nonindicted 23, who was an employee of the National Tax Service in charge of the investigation on the change of shares of Nonindicted Company 11, sent to an investigation agency Nonindicted 22 (Nonindicted 22) who was visiting the Seoul Regional Tax Office at the time of the investigation on the change of shares, and confirmed the fact of title trust from the Defendant with Nonindicted 20, 22 and 1. At the time of the conversion of the borrowed name shares, Nonindicted 3, who was an employee of the National Tax Service in charge of the investigation on the change of shares of Nonindicted Company 11, as at the time of 1998, presented a written statement stating that “At the time of the conversion of the real name of the borrowed name shares, Nonindicted 1, 1998, Nonindicted 23, who was an employee of the National Tax Service, stated that the Defendant was unable to present a written confirmation of title trust with the Defendant’s signature at the last time of Seoul District Court.”

3) On December 22, 1998, Nonindicted 25, who worked as the director of the re-election team of Nonindicted Company 11 at the time of the report on the conversion of real name, stated that “In the National Tax Service in December 22, 1998, Nonindicted 25, who was working as the director of the re-election team of Nonindicted Company 11, made a legal review on the contents reported on the Roster on the Roster at the level of group corruption, was recorded with Nonindicted 5’s managing director and reported in accordance with the orders of the Defendant and Nonindicted 22, etc.” However, in the trial of the political party, it stated that “the punishment was arranged in accordance with the orders of Nonindicted

4) Meanwhile, it is found that the part of Nonindicted 22’s statement concerning the time of donation of the instant shares was inconsistent with the Defendant’s statement concerning the circumstance when Nonindicted 3 was first aware of the existence of the instant shareholder registry. In other words, the Defendant asserts that, with respect to the time of donation of the instant shares, the donation was made to Nonindicted 3 and Nonindicted 4 in 191, or in 194, which was prepared with respect to Nonindicted 3 and Nonindicted 4, and that the donation was made in the name of the Defendant in 194. In addition, with respect to the circumstances where the instant shareholder registry was viewed, Nonindicted 22 had no reasonable doubt that it was made at the time of investigation by the National Tax Service that “The shares were transferred from Nonindicted 3 to Nonindicted 4, 203, and that there was no change in the ownership of Nonindicted 3’s shares at the time of transfer of the instant shares to the Defendant, and that there was no doubt that it would have been a change in the name of Nonindicted 3’s shareholder registry.”

5) In addition, even though Non-Indicted 3 stays in a foreign country as of June 6, 1996 because he had no address in Korea for eight years until June 6, 1996, the shareholder registry of this case was written in Gangnam-gu (Seoul 1 omitted) as the Seoul 12 page (12 page) and Non-Indicted 3’s address on March 15, 1994 as the "Seoul 12 page (2 omitted)" (18 page), Non-Indicted 19, Non-Indicted 9, Non-Indicted 4, Non-Indicted 9, Non-Indicted 197, Non-Indicted 9, Non-Indicted 197, Non-Indicted 9, Non-Indicted 197, Non-Indicted 19, Non-Indicted 19, Non-Indicted 19, Non-Indicted 19, Non-Indicted 19, Non-Indicted 19, Non-Indicted 19, Non-Indicted 3, 196, Non-Indicted 196.

6) Although the court of the competent trial entrusted the National Scientific Investigation Institute with a written appraisal of the copy of the instant register of shareholders, it was impossible to conduct the written appraisal by means of a copy of the instant register of shareholders.

5. Conclusion

Thus, the prosecutor's appeal is dismissed under Article 364 (4) of the Criminal Procedure Act since it is without merit.

Judge Cho Jong-hun (Presiding Judge)

1) On September 30, 2014, the prosecutor presented a written opinion to the effect that the expression of the facts charged is partially corrected, and this court permitted the correction to the same effect on the 9th trial held on the same day. However, such correction is merely a part of the expressions of the existing facts charged, and it is difficult to view it as a modification of an indictment that constitutes a ground for ex officio destruction, and taking into account the foregoing circumstances, part of the facts charged is corrected as follows.

Note 2) Change in the number of stocks through a change in the capital or face value.

Note 3) Change in the number of stocks through a change in the capital or face value.

4) As seen later, Nonindicted 1 and Nonindicted 2 did not purchase the shares from the Defendant, and they did not pay the purchase price, and filed a false lawsuit claiming the return of the shares after cancelling the transfer contract.

5) The duty to pay gift tax is established at the time of acquisition of property by gift (Article 21(1)3 of the Framework Act on National Taxes). If donated property is a stock, it shall be deemed that the donee acquired the relevant stocks, etc. by payment of dividend or exercise of shareholder rights on the date objectively confirmed (Article 23(2) of the Enforcement Decree of the Inheritance and Gift Tax Act

6) Determination as to whether there was a gift tax subject to gift tax under tax law ought to be based on whether a person acquired shares and acquired the status as a shareholder to exercise the rights as a shareholder by acquiring shares (see Supreme Court Decision 2004Do817, Jun. 29, 2006).

7) Ordinary title trust refers to a title trust where a person borrows another person’s name in various data representing that the person is externally a shareholder based on the name of the shareholder stated in the list of changes in shares in the case of failure to issue share certificates, preparation of the register of shareholders, list of changes in shares in the company, register of issuance of shares in custody in the company, and list of shareholders attached to the statement of accounts reported to the general

8) On or around September 2004, when the Defendant donated the instant tea stocks to Nonindicted 4 and Nonindicted 3, the gift tax is equivalent to KRW 7.6 billion (the acquisition value per share on June 22, 2004, KRW 162,500).

9) The agreement provides that “Nonindicted 1 and Nonindicted 2 shall sell the shares to the Defendant and transfer the ownership of the shares to the Defendant within five days, but if the Defendant fails to pay the purchase price, the name of the shares shall be restored to the original state.” The highest written notice states that “If the Defendant does not pay the purchase price, the name of the shares shall be returned,” and the written notice states that “Nonindicted 2 and Nonindicted 1 shall commence legal proceedings as the refund of shares is not implemented.”

Note 10) The copy of the share certificates submitted by the Defendant is a share certificate which is designed to be adjacent to the above book-keeping registry and does not have an original copy.