Defendant 1 and two others

Defendants et al.

Kim Jae-soo

Attorney Hah Ho-su et al.

Seoul Central District Court Decision 2004Ra4648 Delivered on October 28, 2004

All appeals filed by the Defendants and the Prosecutor are dismissed.

1. Summary of grounds for appeal;

A. Defendants

Considering the various circumstances of this case, the sentence of the court below to the defendants (eight months of imprisonment) is too unreasonable.

(b) Prosecutors;

As to each part of the violation of the Door-to-Door Sales, etc. Act, the court below held that the sales organization operated by the defendants (referred to as "Yekhan") did not constitute a multi-level marketing under the Door-to-Door Sales, etc. Act, but it should be interpreted that Article 2 subparagraph 5 of the current Door-to-Door Sales, etc. Act provides that the main element of multi-level marketing for the payment of the bonus to multi-level marketing operators based on a certain sales activity and sales performance of multi-level marketing operators is multi-level marketing, and the multi-level marketing organization regulates all the cases where the salesperson's subscription is made at least three levels and the bonus is paid by multi-level marketing operators according to the sales performance of multi-level marketing operators. However, the court below erred in the misapprehension of legal principles as to the multi-level marketing organization under the premise that the payment of bonus does not include the sales performance of the sales organization under this case.

2. Determination

A. Judgment on the misapprehension of the legal principle by the prosecutor

(1) Summary of the facts charged

Of the facts charged against the Defendants, the summary of the violation of the Door-to-Door Sales, etc. Act on Door-to-Door Sales to the Defendants is as follows: (a) the Defendants conspired with the administrative authority on January 1, 2004 to join the above company's multilevel salesman's multilevel salesman's office from July 14, 2004; (b) Yellow Ginseng's office sold by Yellow Ginseng and 100 won under the condition that consumers buy 3.50,00 won; (c) if the multilevel salesman purchases the above product with two assistant multilevel salesman's number of multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel salesman's number of assistant multilevel's number of assistant multilevel salesman's number of assistant multi-level salesman's number of assistant multi-level salesman's number 90 or 0.

(2) The judgment of the court below

The court below found the defendants not guilty of all the charges of this part on the ground that the above sales organization's forms of sales organization are not multi-level marketing under Article 2 subparagraph 5 of the Door-to-Door Sales Act, since the sales organization's sales organization's sales organization's sales organization's sales organization's sales organization's sales organization's multi-level marketing organization's sales organization's sales organization's sales organization is not a multi-level marketing organization under Article 2 subparagraph 5 of the Door-to-Door Sales Act, since the sales organization's sales organization's sales organization's sales organization's direct sales organization's sales organization is not a multi-level marketing organization under Article 2 subparagraph 5 of the Door-to-Door Sales Act.

(3) Judgment of this Court

(A) Relevant provisions

(1) For the purpose of subparagraph 5 of Article 2 of the Door-to-Door Sales, etc. Act, the term "multi-level marketing" means selling goods, etc. through a multi-level marketing organization (including sales organizations prescribed by Presidential Decree, which are managed and operated as sales organizations, the actual stages of which are not less than three stages among sales organizations that have joined the sales organization and are actually managed and operated as sales organizations, the stages of which are not less than two stages) in which a sales business operator is admitted as a salesman (referring to retail profits that a multi-level marketing salesperson gains by selling goods, etc. to consumers and support allowances paid by a multi-level marketing business operator to such multi-level marketing business operator; hereinafter the same shall apply) by engaging in any of the following activities:

(a) The goods, etc. supplied by the relevant distributor shall be sold to consumers;

(b) He has to get the consumers as referred to in item (a), in whole or in part, to be admitted as his assistant salesman and to carry out the same activity as his;

(2) Subparagraph 7 of the same Article means the economic benefits that a multi-level marketing business operator pays to a multi-level marketing salesperson in relation to the following matters, regardless of the name and form of payment, such as sales allowances, good offices fees, incentives, and support payments:

(a) Results of organizational management, education and training for assistant multi-stage salesmen belonging to multi-stage salesmen;

(b) Sales records of goods, etc. of multi-stage salesmen or sales records of goods, etc. of multi-stage salesmen belonging thereto;

(3) Article 2 (1) of the Enforcement Decree of the Door-to-Door Sales, etc. Act: The term "sales organization prescribed by Presidential Decree" in the main sentence of subparagraph 5 of Article 2 of the Door-to-Door Sales, etc. Act

1. A sales organization that is identical or similar to a sales organization that has at least three stages of salespersons in the method of paying bonuses to salespersons;

2. Where a person entrusted with the sale or organizational management by another person (excluding a person registered as a multi-stage sales business operator under Article 13 of the Act) recruits, manages and operates his/her assistant multi-stage sales, his/her sales organization and its subordinate sales organization are at least three stages, or similar sales organizations are managed and operated in a similar manner, in view of such person and its subordinate sales organization

(4) Paragraph (2) of the same Article: The method of paying support allowances to salespersons under paragraph (1) 1, and the guidelines for the management and operation of three or more stages under subparagraph 2 of the same paragraph or the similar guidelines shall be prescribed by Ordinance of the Prime Minister.

(5) Article 5 (1) of the Enforcement Decree of the Door-to-Door Sales, etc. Act: The criteria for methods of paying bonuses to salespersons who are identical or similar sales organizations with at least three stages of salespersons under Article 2 (2) of the Enforcement Decree of the Door-to-Door Sales, etc. Act shall be as follows

1. Bonuses shall be paid to salespersons who engage in direct sales activities;

2. The support allowances shall be affected not only by the sales records of assistant salesmen who belong directly to the relevant salesperson but also by the sales records of other salespersons who affect the support allowances of their assistant salesmen;

(6) Article 2 (2) of the Enforcement Decree of the Door-to-Door Sales, etc. Act: Where a person who has entrusted sales or organizational management has an impact on the recruitment, management, and payment of support allowances to a person who has entrusted sales or organizational management by proxy or by supporting, supervising, etc. a part of his/her duties in relation to the recruitment, management, and payment of support allowances to a person who has entrusted sales or organizational management, and the stage of sales by the entrusting

(B) Determination

Article 2 subparag. 5 of the Door-to-Door Sales, etc. Act defines "the sales of goods, etc. through three or more stages of organization by soliciting that certain profits (retail profits and bonuses) can be obtained in the multi-level marketing," and Article 2 subparag. 7 of the same Act defines "support allowances" as "the economic benefits that the multi-level marketing business entity pays to multi-level marketing salespersons with regard to the organization management and education and training of multi-level marketing salespersons belonging to multi-level marketing salespersons, sales of goods, etc. or sales of multi-level marketing salespersons belonging to the multi-level marketing business entity," and Article 2 subparag. 7 of the same Act provides that the concept of "non-level marketing salesperson" is limited to that of multi-level marketing salespersons belonging to the multi-level marketing business entity, and there is no reasonable ground to interpret the concept of "non-level marketing salesperson" as limited to that of multi-level marketing salespersons belonging to the multi-level marketing organization, and that it is difficult to directly pay support allowances to consumers in excess of two stages of sales and sales.

In this case, according to the records, since the defendants purchased yellow ginseng products of 350,000 won or more which are operated by the defendants and acquired qualifications as promotional personnel, the court below's determination that the above assistant salesman was not exempt from the sales of 400,000 won to 4,60,000 won according to the prescribed water supply out of 1 through 20 according to the sales performance is not justified since the above assistant salesman was not exempt from the sales performance of 2,10,000 won or more to 3,00 won, since the above assistant salesman was not exempt from the sales performance of 3,00 won or more to 2,00 won or more to 3,00 won or more to 2,00 won or more to 3,00 won or more to 2,00 won or more to 3,000 won or more to 3,000 won or more to 3,000 won or more to 3,000 won or more to 3,000.

B. Determination on the Defendants’ assertion of unfair sentencing

According to the records, Defendant 1 committed the instant crime within the repeated crime period even though he had been sentenced to three years of imprisonment due to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) on March 26, 2000, despite the fact that he had been sentenced to imprisonment on March 26, 200, Defendant 1 committed the instant crime. As such, the Defendants’ assertion of unfair sentencing of the Defendants is recognized as appropriate since the sentence of the lower court is not consistent with all of the circumstances, including the following: (a) as if the Defendants had excellent efficacy of medicine, they advertised the product that does not contain the sulfur powder ingredients, and sell it to 700,000 won, and thereby, did not cause the quality of the crime; and (b) the damages suffered by consumers and salespersons.

3. Conclusion

Therefore, the appeal by the defendants and the prosecutor is dismissed in accordance with Article 364 (4) of the Criminal Procedure Act since all of the appeals by the defendants and the prosecutor are without merit. It is so decided as per

Judges Lee Jin-jin (Presiding Judge)