Defendant

Defendant and Prosecutor

Ison-gu

Attorney Kim Young-soo et al.

Seoul District Court Decision 2003Gohap145 delivered on November 28, 2003

The guilty portion of the judgment of the court below shall be reversed.

Defendant shall be punished by a fine of KRW 20,000,000.

When the defendant fails to pay the above fine, the defendant shall be confined in a workhouse for the period converted into one day.

The 36 days of detention before the pronouncement of the judgment below shall be included in the period of detention in the workhouse.

Of the charges of this case, the charge of violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes is not guilty

The prosecutor's appeal against the acquittal portion of the judgment below is dismissed.

1. Summary of grounds for appeal;

A. misunderstanding of facts or misapprehension of legal principles as to the crime No. 1 of the judgment of the court below

In acquiring Nonindicted Co. 1 (hereinafter referred to as “Nonindicted Co. 1”), the Defendant: “LBO method”, which is a method of corporate acquisition and merger; namely, the Defendant acquired assets of Nonindicted Co. 1, a acquired company, as security, from a financial institution; took over the acquired company with the funds; and used a method of repaying the above loans with profits obtained by normalization of the acquired company’s management or funds raised by selling the acquired company’s assets; and the Defendant, at the time of the reorganization process, acquired Nonindicted Co. 1, a company’s management through the Defendant’s effort to normalize its management through normalizing the Defendant’s company’s management; and acquired the Nonindicted Co. 2 (hereinafter referred to as “Nonindicted Co. 1”) established by both the Defendant and the Defendant to take over the Nonindicted Co. 1 (hereinafter referred to as “Nonindicted Co. 2”). In fact, the lower court did not err by misapprehending the legal doctrine on Nonindicted Co. 1’s intent to cause damages to Nonindicted Co. 1’s business through the increase in sales amount of Nonindicted Co. 1’s assets and its management.

B. misunderstanding of facts and misapprehension of legal principles as to the crime No. 2 of the judgment below

The Defendant held 6.2% of the issued shares of Nonindicted Company 1 and actually used the above borrowed shares for the benefit of Nonindicted Company 1 in fact, and the Nonindicted Company 1 and Nonindicted Company 2 changed to an integrated financial securities company (mutually omitted on December 1, 2001) for acquiring Nonindicted Company 1, but the maturity period for the repayment of the debt borrowed from Nonindicted Company 3 Co. 2 for acquiring Nonindicted Company 1 has expired, and in this case, the Defendant was due for the payment of the debt borrowed from Nonindicted Company 3 Co. 3 (hereinafter “Nonindicted Co. 3”). In order to repay the debt, the Defendant was provided with sufficient security from Nonindicted Co. 2 for the repayment and lent KRW 31 billion to Nonindicted Co. 2. In fact, the Defendant used the above borrowed amount as part of the above borrowed amount for the benefit of Nonindicted Co. 1. Thus, the lower court erred by misapprehending the legal principles as to the intention of breach of trust, thereby affecting the conclusion of the judgment.

C. misunderstanding of facts and misapprehension of legal principles as to the prosecutor's acquittal portion

Although there was no additional loan due to the instant additional security, the provision of the additional security itself caused new risk burden to Nonindicted Company 1, and thereby, it should be deemed that Nonindicted Company 2 obtained property benefits. However, the lower court erred by misapprehending the legal doctrine of breach of trust and by misapprehending the fact that there was no property damage to Nonindicted Company 1, thereby adversely affecting the conclusion of the judgment.

D. The defendant and prosecutor's assertion of unreasonable sentencing

In light of various sentencing conditions, the sentence of the judgment of the court below is too unreasonable for the defendant. On the other hand, in light of the contents and nature of the defendant's crime, the sentence of the judgment of the court below is too unreasonable.

2. Determination on the grounds for appeal

A. As to the Defendant’s assertion of mistake of facts or misapprehension of legal principles as to the crime No. 1

(1) Summary of the facts charged

The Defendant, as the preferred bidder and representative of Nonindicted Company 1, violated his duty to preserve the company’s assets and manage them with due care so as not to infringe the interests of the shareholders and creditors of the above company. On June 4, 2001, Nonindicted Company 2, a company in the name of Nonindicted Company 3 located in the Jung-gu Seoul Special Metropolitan City (detailed address omitted), obtained a loan of KRW 35 billion from Nonindicted Company 3,5 billion from Nonindicted Company 1’s closing money, the Defendant agreed to set up a collateral security at KRW 5,271,00,000 at the market price of the said real estate (hereinafter “instant secured real estate”), and agreed to obtain KRW 300,000,000,000 to KRW 50,000,000,000 to KRW 320,000,000,000,000 won, and provided KRW 155-15,500,000,000 won to Nonindicted Company 32,032,031.

(2) The judgment of the court below

As to the above facts charged, the court below presumed that the act of offering most of the important assets or assets of the company as collateral is highly likely to harm the interests of the general shareholders or creditors of the company. Thus, unless measures are taken to protect the interests of interested parties, such as shareholders, etc. such as the plan to acquire equivalent consideration or measures to recover collateral are taken, it shall not be permitted as an act of causing damage to the company's property. Thus, as in this case, even if the acquirer uses the so-called "LBO method" which provides the assets of the acquired company as collateral by the financial institution to raise funds necessary for the acquisition of the company, such as the bankruptcy company's default and legal management, even if the acquired company uses the so-called "LBO method" which provides the assets of the acquired company as collateral, such act shall be deemed as an act of offering funds to the acquired company as collateral, and thus, such act of offering funds to the non-indicted company's shareholders or creditors should not be deemed as an act of offering funds equivalent to the above liability of the defendant to the above non-indicted company. Furthermore, the above act of offering funds or collateral collateral security by the defendant should be deemed as an act.

(3) Determination of party members

(A) On the other hand, the intention of the crime of occupational breach of trust is established in combination with the perception that the person handling another's business would inflict property damage on the principal and that the intention of his or her or a third party is in violation of his or her duty. The subjective element of the crime of occupational breach of trust (such as intention, motive, etc.) is to be proved by the method of proving indirect facts that have considerable relation with the intention of the defendant in light of the nature of the object in a case where the defendant denies the criminal intent by asserting that he or she committed the act at issue was at issue for the principal's interest, and what constitutes indirect facts having considerable relation should be determined by the method of reasonably determining the relation of the fact by the degree of strict observation or analysis based on normal empirical rule. Even if the defendant had expressed his or her intent to pursue the principal's interest, the intention of the crime of occupational breach of trust was only incidental to the above indirect facts, and if it is confirmed that the defendant's intent or damage was the principal (see, e.g., Supreme Court Decision 2002Do3687, Feb.

According to the evidence duly examined and adopted by the court below, the defendant established the non-indicted 2's company on the document for the purpose of acquiring the non-indicted 1 company on May 23, 2001, and on June 7, 2001, the non-indicted 2 acquired shares equivalent to 66.2% of the shares of the non-indicted 1 company, and the defendant was working as the representative director of the non-indicted 1 company from that time. Thus, the mutual company and the stock company and the shareholders cannot be the same person as the existence of separate corporate personality. Thus, even if multiple companies belong to or are under the control of the non-indicted 1 shareholder or majority shareholder, the crime of breach of trust is established if there is an act of breach of duty by one-party shareholder or majority shareholder, while the defendant is the majority shareholder of the non-indicted 1 company, and the damage of the non-indicted 2 company is the damage of the non-indicted 1 company and the defendant. Thus, in such a case, it should be determined carefully as to which the defendant's act of breach of duty.

(B) The definition and structure of so-called “LBO”;

The so-called “LBO” used in one manner of corporate acquisition and merger provides assets of the company subject to acquisition, directly or indirectly, as security, and raises funds for corporate acquisition from outside, and then purchases a specific public company based on it. The characteristics of the LBO are that most of the acquisition funds depends on other capital than equity capital in corporate acquisition and merger. The LBO method uses assets such as the real estate, stocks, bonds, etc. of the acquired company as security in order to raise funds necessary for corporate acquisition, and after the acquisition of the acquired company, sells the assets of the acquired company and redeems the liabilities of the acquired company or to realize its profits by selling them by means of improvement of management, etc.

In this LBO method, ① the transferee acquires the assets of the acquired company and pays the proceeds of the acquired assets by borrowing the acquired assets as collateral, ② the method of acquiring the stocks of the acquired company with the funds borrowed by the transferee and providing the assets of the acquired company as collateral for the borrowed assets of the acquired company, ③ the method of establishing a new company and allowing the acquired company to acquire the stocks of the acquired company by borrowing funds from the acquired company, and then the acquired company and the new company will be merged with the acquired company to repay the existing debts of the acquired company.

However, such LBO method is often used when it is judged that the company's assets mainly were lower than the potential assets. In other words, the current owner or the management's ability to manage the company is so far as it is judged that the company is unable to utilize the potential assets as much as possible. In the case of the acquisition of the company by such LBO method, ultimately, the liabilities borrowed for the acquisition of the company are ultimately the liabilities of the acquired company. Therefore, the success of the acquisition of the company by the LBO method can be raised at a timely and low cost by how much the funds necessary for the acquisition of the company can be raised, and can be effectively repaid, and due to these reasons, if the acquirer has no ability to raise funds, it is difficult to expect that the acquirer is given an opportunity to take over the small amount of capital in case of the LBO method.

(c) Issues in this case

In acquiring Nonindicted Company 1 through the above LBO method, the Defendant appears to have selected three methods from among the methods of using the assets of the acquired company in the above paragraph (However, even until now, the above merger problem is about the methods of resolving debts owed by the acquiring company to financial institutions, and is not an essential requirement for the acquisition of the LBO method, and the Defendant uses the method of borrowing funds from Nonindicted Company 1 to repay the debts of Nonindicted Company 2, as seen below, so it seems that Nonindicted Company 1 and Nonindicted Company 2 were not merged because the need for the merger is not large).

However, just because of the use of LBO method in such LBO acquisition, it cannot be deemed that the recipient causes damage to the recipient company and the transferee gains profit corresponding thereto. Even if the risk of disposal as collateral was caused by the recipient company by providing the assets of the recipient company as collateral, as long as the recipient company gains profit such as the extinction of existing liabilities, it cannot be readily concluded that the recipient was guilty of breach of trust at the time of the acquisition immediately on the ground that the recipient provided the assets of the recipient company as collateral. Accordingly, in this case, in full view of all the process of acquiring the company using the above LBO and providing the assets of the recipient company as collateral, and all the various circumstances revealed after the acquisition, etc., the defendant should be carefully determined whether the defendant can be recognized as guilty of breach of trust, and this part of the facts charged is an issue in determining the innocence or innocence.

(d)Recognized facts

Comprehensively taking account of the evidence duly examined and adopted by the court below, the following facts can be acknowledged.

① On September 3, 1999, Nonindicted Co. 1 filed an application for company reorganization procedure with the Seoul District Bankruptcy Division on September 3, 1999 (at that time, the total debt of Nonindicted Co. 1 was equivalent to approximately KRW 451.5 billion) with the same court on February 3, 200. On September 1 of the same year, the company reorganization procedure was decided to authorize the company reorganization procedure (the condition of the decision to authorize the company reorganization procedure was that the part equivalent to 10% of the total debt of the above total debt of the above company was hot from the creditors, and the part equivalent to 65% is converted into equity among the creditors, and the portion equivalent to 25% is 134.2 billion won by Nonindicted Co. 1 paid to the creditors for five years with the five years grace period).

② Around October 200, the Defendant selected Nonindicted Company 1, which was under the company reorganization procedure, as an acquiring company, and requested an agenda accounting corporation to assess the corporate value of Nonindicted Company 1, and received an evaluation report from the said corporation that the corporate value of Nonindicted Company 1 constitutes KRW 1,361 per share on the 26th of the same month. On November 2000, the Defendant established S&K World Co. (hereinafter “S&K World Co. (hereinafter “S&K”) with the representative director in the U.S. on the part of the U.S., and on November 21, 200, drafted a memorandum of understanding that the major creditors of Nonindicted Company 1 and W&K LD acquire the status of priority bidder in the acquisition of Nonindicted Company 1.

③ on March 10, 2001, S&K entered into an agreement for the issuance of new shares with the Nonindicted Company 1 to set the new shares issued by the Nonindicted Company 1 at least KRW 20 million and to take over by S&K Word on the 12th of the same month, and obtained permission from the same court on the 12th of the same month (the investigation records No. 984 of the investigation records; hereinafter the investigation records are indicated only as “number”). Accordingly, on April 30, 2001, it entered into an agreement for the acquisition of new shares with the Nonindicted Company 1 and S&K L&D to take over the new shares issued by the Nonindicted Company 1 in the amount equivalent to KRW 20 million, and on May 22 of the same year from the same court (the number of pages 97).

④ After that, on May 23, 2001, the Defendant: (a) made it difficult for the Defendant to raise funds necessary for the acquisition of Nonindicted Company 1 in the name of S&K in the name of S&K; (b) made an agreement between Nonindicted Company 2, Nonindicted Company 1, and S&WD on April 30, 201 with the aim of raising funds from domestic financial institutions; (c) made it possible for the Defendant to become the representative director; and (d) made an agreement between Nonindicted Company 2, 1, and S&K to succeed to all contractual rights and obligations under the new shares acquisition contract as of April 30, 201; and (d) made an amendment to the said agreement from the said court on April 30, 201 to the “amount equivalent to KRW 2,00,000,000,000,000,000,000,000,000 won.”

⑤ On May 25, 2001, the Defendant, the representative director of S&K, paid KRW 9 billion to Nonindicted Co. 3 for the closure of Nonindicted Co. 1’s statutory management, and the Nonindicted Co. 1, after the completion of Nonindicted Co. 1’s legal management, concluded an agreement with Nonindicted Co. 3 to automatically terminate all claims, including the remaining reorganization claims in possession of Nonindicted Co. 1, and the pledges of Nonindicted Co. 3 with respect to the claims in possession of Nonindicted Co. 1, the Defendant again renewed the said agreement with Nonindicted Co. 3 on June 15, 2001, when he was appointed as the representative director of Nonindicted Co. 1, who was the Defendant, with the effect that the amount that Nonindicted Co. 1 would pay to Nonindicted Co. 3 for the class money was increased by KRW 9.6 billion (No. 63-68) and on June 27, 2001, in accordance with the said agreement, the Defendant paid KRW 360 million to Nonindicted Co. 3 billion.

(6) On June 4, 2001, the Defendant agreed to set up a pledge on Nonindicted Co. 2’s shares issued by Nonindicted Co. 1 (the face value of KRW 5,000, and KRW 26 billion) to Nonindicted Co. 2’s shares to be acquired by participating in the capital increase with the capital increase of Nonindicted Co. 1. After Nonindicted Co. 2 acquired Nonindicted Co. 1, the Defendant agreed to set up a pledge on the instant secured property with Nonindicted Co. 3, which is the ownership of Nonindicted Co. 1, and received a loan of KRW 35 billion from Nonindicted Co. 3’s class in the name of E&D case (the above loan was KRW 8 billion on June 30, 202; the remaining maximum debt amount was KRW 300 million on June 14, 2003; the Defendant agreed to set up the instant secured debt amount to Nonindicted Co. 35 billion on the same real property as the secured debt amount; and the Defendant agreed to set up the instant secured debt amount from Nonindicted Co. 35 billion. 25 billion.

7) On June 5, 2001, the Defendant: (a) deposited KRW 32 billion in the Korea-U.S. Bank held in cash at the Korea-U.S. Bank after acquiring Nonindicted Company 1; (b) deposited KRW 32 billion in the Korea-U.S. Bank held in cash at the Korea-U.S. Bank; and (c) obtained a loan on December 5, 2001 with the maturity of KRW 32 billion in the name of Nonindicted Company 2 as a security for the said loan; and (d) concluded a pledge agreement with the board of directors on a fixed deposit account with the Korea-U.S. Bank held by Nonindicted Company 1 as a security for the said loan; and (e) concluded a pledge agreement with the Korea-U.S. Bank as a security for the said loan; and (e) concluded a pledge agreement with the Korea-U.S. Bank as a security for the said loan amount of KRW 132 billion in total on the 9th of the same month.

viii) The Defendant had a total of 67 billion won of the above loans, and on June 4, 2001, on the part of Nonindicted Company 2’s acquisition of new shares, on the part of Nonindicted Company 2, 26 billion won, deposited Nonindicted Company 2’s account (Account Number omitted) with the purpose of paying Nonindicted Company 1 to Nonindicted Company 1. On the 7th of the same month, he acquired 5.2 million won of registered common shares issued by Nonindicted Company 1 by the method of third party allocation, and paid the subscription price for shares (the number is 407, 416), and on the 364th of the same month, he used the above 10 bonds against Nonindicted Company 1, including the total of 5,1633,903, 676,000 won of the above company’s stocks, 300 million won of the above 384 billion won of the capital amount, 306 billion won of the total of 384 billion won of the above bonds (the face value is KRW 21, 306369,7969 million won of the capital amount per share).

① On June 7, 2001, the Seoul District Court approved the application for early repayment of a reorganization security and reorganization claim against the reorganization security holder and reorganization creditor of the non-indicted company 1 who agreed to make early payment of 26 billion won paid by the non-indicted 1 on June 8, 2001, upon the application by the administrator non-indicted 4 of the non-indicted 1 company, for the permission of early payment of part of the bonds at a discounted value (No. 586 pages). According to the above permission, the non-indicted 1 transferred the bonds and interest on the bonds of the reorganization security holder and reorganization creditor of the non-indicted 1 on June 8, 2001 to the security holder and reorganization creditor of the non-indicted 1 through the Han-U.S. Bank (the principal 21,14,917,346 won + interest1,87,939,935 won + interest 1,87,935 won).

(10) On June 7, 2001, the Defendant obtained a permit to appoint Nonindicted Company 1 as the representative director from the same court (at the time, the shares issued by Nonindicted Company 1, which were held by Nonindicted Company 2, had been registered until 10,316,93, and the share ratio reaches 66.2%). On the same day, the Defendant applied for the closure of the company reorganization procedure in the same court on the same day, and the above court concluded the company reorganization procedure for Nonindicted Company 1 on the same day.

1) On August 23, 2001, the Defendant entered into a pledge contract between Han Bank Co., Ltd. (hereinafter “ Han Bank”) and Han Bank (hereinafter “ Han Bank”), with a view to replacing loans from Han Bank (hereinafter “ Han Bank”), and on June 4, 2001, the Defendant paid the Defendant a loan of KRW 32 billion from Han Bank under the name of Han Bank (hereinafter “ Han Bank”) on the part of Han Bank as the object of a pledge right, with a term deposit of KRW 32 billion (Account No. 1) holding against Han Bank as the object of a pledge right.

(12) After the completion of the corporate reorganization procedure of Nonindicted Company 1, the Defendant made efforts for the normalization of Nonindicted Company 1; (i) at the time of Nonindicted Company 2’s acquisition of Nonindicted Company 1; (ii) at the time of the completion of the statutory management of Nonindicted Company 1, Nonindicted Company 1, the total debts owed by Nonindicted Company 1 to the reorganization security holders and reorganization creditors, i.e., KRW 103,481,934,00 ( + KRW 94,602,560,000 for reorganization creditors’ debts to the reorganization security holders + KRW 87,625,29,000 for December 31, 201; and (iii) at the time of the increase of KRW 200,000 for the total debts of Nonindicted Company 2, 300,000 won for the construction work, the total debts of Nonindicted Company 1, 200,000 won for KRW 20,300,000 for the construction work,00.

(E) Determination

As acknowledged above, in light of the method of acquiring the shares of Nonindicted Company 1 in the process of the company reorganization after acquiring the shares of Nonindicted Company 1 through the so-called LBO method, that is, when the Defendant took over the shares of Nonindicted Company 1 in the process of acquiring the shares of Nonindicted Company 1 in the process of the company reorganization by acquiring the funds from Nonindicted Company 3, Korea-U.S. Bank, etc., the Defendant acquired the assets of Nonindicted Company 1 by taking over the funds from Nonindicted Company 1 later, and the process of acquiring the assets of Nonindicted Company 1 as security for each of the above loans from each of the above financial institutions, and the Defendant ultimately used and executed all of the funds borrowed from the above financial institutions for the purpose of paying the debts to the creditors of Nonindicted Company 1, and thereby, it did not contribute to improving the financial structure of the Nonindicted Company 1, which was in the process of the company reorganization, and there is no room to conclude that the Defendant had any intent to provide the above funds to the Defendant as security for the acquisition of all of the assets of the Nonindicted Company 11.

Rather, according to the statement of the Defendant’s written opinion on the preparation of the agenda accounting firm submitted by the Defendant’s defense counsel in the trial of the political party, the Defendant is the representative director of the Nonindicted Company 1 after acquiring the Nonindicted Company 1, and the Defendant has consistently endeavored to improve the financial structure of Nonindicted Company 1 by means of repayment of loans, etc. to the existing financial institutions of Nonindicted Company 1 with funds raised by selling the assets of Nonindicted Company 1, or by collecting existing loans and construction cost claims, etc. In comparison with the Defendant’s acquisition at the time of acquiring the Nonindicted Company 1, it can be sufficiently confirmed that the Defendant has raised significant results of management improvement, such as an increase in the size of the company due to the increase in sales, a substantial increase in the value of the company caused thereby, and a decrease in liabilities. In light of the series of actual processes in which the Defendant made efforts to normalize the management of Nonindicted Company 1 after the acquisition of the Nonindicted Company 1, it appears that the Defendant has been strongly supported by the Defendant

Furthermore, it is difficult to view that the Defendant offered the assets of Nonindicted Company 1 as collateral to the above financial institutions for the acquisition of Nonindicted Company 1, in itself, not only caused actual damage to Nonindicted Company 1, but also caused the risk of actual damage to property. Here, the risk of actual damage to Nonindicted Company 1 is ultimately likely to cause the loss of the instant secured real estate. According to the records, the instant secured real estate had already been established a right of lease equivalent to KRW 25.4 billion prior to the offering of collateral to Nonindicted Company 3, and a right of lease equivalent to KRW 30 billion has already been registered for provisional disposition. Although the registration of provisional disposition was completed, the said mortgage registration was revoked due to the acquisition of Nonindicted Company 2, and the completion of the corporate reorganization procedure for Nonindicted Company 1, as well as the risk of loss to the instant secured real estate from the standpoint of Nonindicted Company 1, which has been significantly decreased due to the decrease in the risk of loss to the above secured real estate from the standpoint of the above secured real estate by the Defendant’s disposal of the secured real estate in this case.

B. As to the Defendant’s allegation of mistake and misapprehension of legal principles as to the crime No. 2

(1) Summary of the facts charged

The defendant, as the representative of the company, protects the company's property and lends money to any other person, there were duties not only confirming the collateral value, but also those that should not be lent without any possibility of undermining or recovering the loan amount. However, the value of the reorganization claim against the non-indicted 1, the only property owned by the non-indicted 2, is 1/3 of the nominal amount of the claim, and shares is 1,0360,000 won. In light of the company reorganization plan and the management status of the non-indicted 1, the above claim is not distributed smoothly in the financial market. The claim is repaid for five years with five years grace, and the claim is also repaid for the above 700,000 won for the non-indicted 3,000 won for the above 75 billion won for the non-indicted 3,000,000 won for the non-indicted 2,000 won for the loans to the non-indicted 2,500,000 won for the non-indicted 1,2164.75 billion won for the above company.

(2) The judgment of the court below

As to the above facts charged, the court below found the defendant guilty on the ground that, inasmuch as the defendant, as the defendant, as the representative director of the non-indicted 1 company, has faithfully executed funds in accordance with the financial condition or purpose of its establishment, he lent funds on behalf of the non-indicted 2 company, which is not related to the non-indicted 1's business, under exceptional favorable terms for the non-indicted 1's business, it acquired reorganization claims as collateral and used in repayment of the loan principal of the non-indicted 3's above non-indicted 2 company's loan, which reduces the risk of the execution of security against the real estate provided as security, and even if there is a aspect of benefit to the non-indicted 1, the defendant has the intention to commit the crime of breach of trust against the non-indicted 1 company, and caused the risk of actual damage to the property of the non-indicted 1 company.

(3) Determination of party members

(A) Recognized facts

According to the evidence duly adopted by the court below, the defendant was holding 70 billion won for the above non-indicted 2's loans to the non-indicted 1 70 billion won for the repayment of the above non-indicted 3's loans to the non-indicted 1 70 billion won, and the non-indicted 2 10 billion won for the above non-indicted 2's loan 1 70 billion won for the non-indicted 200 billion won for the above non-indicted 3's loans to the non-indicted 1 70 billion won, and the non-indicted 200 billion won for the above non-indicted 200 million won for the non-indicted 3's loans to the non-indicted 1 70 billion won for the above non-indicted 2's loans to the non-indicted 60 billion won. The non-indicted 2's loan to the non-indicted 300 billion won for the above non-indicted 1's new loans to the non-indicted 3's dividends of 100 billion won.

(B) Determination

As seen earlier, the Defendant, a de facto shareholder, owns the shares of Nonindicted Company 1 by 6.2% or more, and thus, the damage of Nonindicted Company 1 was the damage of Nonindicted Company 2 and the Defendant and the above two companies actually share the same interest. The Defendant used all of the funds borrowed from Nonindicted Company 3 in the name of Nonindicted Company 2 as the acquisition fund of Nonindicted Company 1 in the name of Nonindicted Company 2, and ultimately was used for the repayment of debt to the creditors of Nonindicted Company 1, and eventually was ultimately executed and used for the interest of Nonindicted Company 1. The Defendant used all of the funds borrowed from Nonindicted Company 1 in the name of Nonindicted Company 2 for the repayment of debt to Nonindicted Company 3 and the payment of interest thereon, and in the process, there was no other personal benefit for the Defendant. In light of the above fact that Nonindicted Company 1 had no other intent to obtain the above loans from Nonindicted Company 1 in the name of Nonindicted Company 2, and there was no other real value that the Defendant provided the above funds to Nonindicted Company 2 as a collateral, as well as the real value that the Defendant provided the above real value of the real property.

In addition, in the case of the crime of breach of trust, the term “when property damage was inflicted” includes not only the case of causing a real loss but also the case of causing a risk of actual damage to property. However, Nonindicted Co. 1 was provided with sufficient security at the time of lending the above funds by Nonindicted Co. 2. In addition, Nonindicted Co. 2 appears to have sufficient ability to repay the above loan obligations with dividends to be received in the future from Nonindicted Co. 1 or with the above future bonds, etc., so it is difficult to conclude that the evidence adopted by the court below was insufficient to conclude that the Defendant had no ability to repay the above loan to Nonindicted Co. 2 at the time of lending the above funds, and it is difficult to recognize that the above act by the Defendant resulted in a risk of property damage

C. As to the Prosecutor’s assertion of mistake and misapprehension of legal principles regarding the acquittal portion

In regard to this part of the facts charged against the defendant, the court below held that the act of offering the above deposit amounting to five billion won as security is likely to cause property damage to the principal due to the actor's breach of duty, and according to the evidence, the defendant's act of offering the above deposit amount to non-indicted 3 as security is for the cancellation of security against the original rental apartment among the real estate of this case which had already been offered as security. Thus, since this is nothing more than a replacement of security, it cannot be deemed that the defendant had an intention of additional breach of trust against the non-indicted 1 as to this point, and it cannot be deemed that there was a concern about additional property damage due to the offer of the above deposit, and there is no evidence to acknowledge this, and therefore, this part of the facts charged is not a crime or there is no evidence to prove a crime. If the court below's fact finding and the selection and judgment of evidence which had been conducted in the process, compared with the evidence duly investigated and adopted by the court below, the prosecutor's allegation above is without merit.

D. Sub-determination

Therefore, the prosecutor's appeal against the acquittal portion of the judgment of the court below is without merit, but all of the facts charged against the defendant in violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of trust) among the guilty portion of the judgment of the court below should be pronounced not guilty because it constitutes a case where there is no evidence of crime, but the judgment of the court below which found the defendant guilty guilty is erroneous by misunderstanding facts in violation of the rules of evidence or by misunderstanding the legal principles, which affected the conclusion of the judgment. Therefore, the appeal against this part of the judgment of the court below is justified. Meanwhile, the judgment of the court

3. Conclusion

Therefore, since the prosecutor's appeal against the acquittal portion of the judgment below is without merit, it is dismissed pursuant to Article 364 (4) of the Criminal Procedure Act. Since the defendant's appeal against the guilty portion of the judgment of the court below is with merit, the defendant's appeal against the guilty portion of the judgment of the court below is reversed, and the defendant's appeal against the guilty portion of the judgment of the court below is reversed pursuant to

Defendant,

1. A listed corporation or an Association-registered corporation shall report immediately to the Financial Supervisory Commission and the Stock Exchange or the Association despite the offering of real estate, movable property, securities or other assets as security:

A. When Nonindicted Co. 2 obtained a loan of KRW 35 billion from Nonindicted Co. 3 on June 4, 2001 to July 9 of the same year, the Nonindicted Co. 2 set up a collateral security right equivalent to the maximum debt amount of KRW 35 billion equivalent to the maximum debt amount of KRW 5,271,00,000 on the nine real estate market price indicated in the attached Table, including the head office located in the Yeongdeungpo-gu Seoul Metropolitan Government (detailed address omitted) real estate list, owned by Nonindicted Co. 1, on two occasions from July 3 to July 9 of the same year, and without filing a report with the Financial Supervisory Commission and the Korea Stock Exchange without delay, on June 5 of the same year.

B. On August 23, 2001, at the Dongdo-dong branch of Hando-dong Hando-dong, Nonindicted Co. 2 offered as security the amount equivalent to 32 billion won of the time deposit for one bank owned by Nonindicted Co. 1 in the loan of 32 billion won from Hando-dong-dong-dong-dong-dong-dong Hando-dong-si, and without any report to the Financial Supervisory Commission and the Stock Exchange without delay,

C. On January 18, 2002, Nonindicted Co. 2 offered loans of KRW 35 billion from Nonindicted Co. 3 to Nonindicted Co. 3 as security, such as the foregoing paragraph (a), even if Nonindicted Co. 2 offered as security the deposit amount of KRW 5 billion in a Class-III cash management account (Account Number omitted) owned by Nonindicted Co. 1, but did not report it to the Financial Supervisory Commission and the Stock Exchange without delay;

2. A listed corporation which is obligated to submit a business report as a listed corporation shall enter the matters, etc. concerning the financial affairs of such corporation in the business report for 6 months from the date of commencing the business year and in the business report for 3 months and 9 months from the date of commencing the business year and submit them to the Financial Supervisory Commission and the Stock Exchange or the Association within 45 days after the lapse of the respective period, notwithstanding the fact that

A. On August 13, 2001, the Financial Supervisory Commission located in Yeongdeungpo-gu Seoul Metropolitan Government submitted a half-yearly report to Nonindicted Company 1 on June 2001, and did not state the fact that the collateral was provided as set forth in paragraph (a) of the above No. 1.

B. In submitting a quarterly report on September 2001 at the same place on November 13, 2001 at the same time, the fact that the collateral as Paragraph 1.(b) above was provided was not stated.

The summary of the evidence of the above facts constituting the crime acknowledged by a party member is the same as the corresponding column of the judgment of the court below, and thus, it is cited in accordance with Article 369 of the Criminal Procedure Act.

1. Article relevant to the facts constituting an offense and the selection of punishment;

Articles 207-3 subparag. 2, 186-3 (the fact of false entries in each half-yearly and quarterly report at the time of making a sale), 211 subparag. 2, and 186(1)13 of the former Securities and Exchange Act (amended by Presidential Decree No. 17907 of Feb. 24, 2003), Article 83(3)7 of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 17907 of Feb. 24, 2003), Article 71(1)2 of the Regulations on the Issuance and Publication of Securities and Exchange (the fact of violating the duty to report of each listed company at the time of selling)

1. Aggravation of concurrent crimes;

Article 37(former part of Article 37, Article 38(1)2, and Article 50 (Punishment and Punishment) of the Criminal Act (Aggravated Punishment on the Violation of the Securities and Exchange Act due to False Entry in half-yearly Provisions)

1. Invitation of a workhouse;

Articles 70 and 69(2) of the Criminal Act

1. Calculation in the number of detention days before sentencing of the judgment;

Article 57 of the Criminal Act

Among the facts charged in this case against the defendant, we examine the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust) and examine each part of the judgment on the grounds of appeal as stated in the above. Thus, this part of the facts charged constitutes a case where there is no proof of a crime, and thus, the defendant

Judges Kim Yong-sung (Presiding Judge)