In a case where: (a) the actual operator of a company A; (b) Defendant C and Defendant C, the representative director of the company B; and (c) the company B, filed an application for a loan for rental housing construction fund with a non-bank with respect to the new construction of a rental apartment part among apartment units built by the company B; and (b) the company was prosecuted for deceiving a non-bank by deceiving the National Housing Fund by submitting a sales contract, etc. stating the sale price of the apartment site, the case holding that it is difficult to view that there exists a causal relationship between the

In a case where: (a) Company A, the actual operator of Company B, and Defendant C, the representative director of Company B, and Defendant C, were indicted on the charge of deceiving the National Housing Fund by deceiving an unbank by submitting a sales contract with the National Housing Fund in connection with the loan of rental housing construction funds from a bank that is the trustee of the National Housing Fund in charge of the construction of an apartment constructed among apartment constructed by Company B; and (b) Company B applied for the loan of rental housing construction funds from a bank that is the trustee of the National Housing Fund; and (c) Company B, the Court held that the bank did not set the total amount of loan based on the “sale price per unit” and the “lease price per unit” and the “building price per unit” were calculated based on the “housing price per unit” and “building price per unit” and the “building price per unit” calculated based on the “building price per unit” and “building price per unit” and the “price price per unit” cannot be determined based on the “sale price per unit” and the “price price per unit” cannot be determined based on the “sale price per unit price per unit.”

Articles 17, 30, and 347(1) of the Criminal Act; Article 3(1)1 of the former Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Amended by Act No. 11304, Feb. 10, 2012); Article 325 of the Criminal Procedure Act

Defendant 1 and one other

Defendants

Attorneys Son Ji-yol et al.

Daegu High Court Decision 2013No138 decided December 10, 2015

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined.

1. As to the Defendants’ grounds of appeal on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) (hereinafter “Specific Economic Crimes Act”)

A. Relevant legal principles

The crime of fraud is established by deceiving another person into mistake and inducing the act of disposal, thereby causing the delivery of property or pecuniary gain, and there is a causal relationship between deception, mistake, and property disposal act (see, e.g., Supreme Court Decision 2010Do17512, Feb. 24, 2011). Whether a certain act constitutes deception that causes a mistake of another person, and whether there exists a causal relationship between such deception and property disposal should be determined generally and objectively by taking into account the specific circumstances at the time of the act such as the transaction, the other party’s knowledge, character, experience, occupation, etc. (see, e.g., Supreme Court Decision 201Do8829, Oct. 13, 2011).

On the other hand, the conviction in a criminal trial shall be based on evidence with probative value, which makes it possible for a judge to have the truth that the facts charged are true beyond a reasonable doubt, and if there is no such proof, the conviction cannot be judged on the charge even if there is a doubt of guilt against the defendant (see Supreme Court Decision 2005Do8675, Mar. 9, 2006, etc.).

B. Summary of the facts charged

Defendant 1 is the representative director of Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”) and is the person who actually runs Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2”).

The Defendants and Nonindicted 3, when Nonindicted Company 2 enters into force, and Non-Indicted 1 Company 1 permanently performs the permanent residence (hereinafter “○○○ District”) and Non-Indicted 1 Company △△△△ apartment among the leased apartment of △△△△△△△△ apartment (hereinafter “△△△△△ apartment”) in Ansan-si (hereinafter “△△△△△△ apartment”). Among them, with respect to each of the above leased apartment of the above △△△△△△△△△△△, each of the above leased apartment was “each apartment of this case,” the Defendants and Non-Indicted 3, by raising appraisal and assessment at a higher level than the actual transaction price of the business site, offered loans from the bank lending the National Housing Fund to receive more loans from the bank lending the loan from the National Housing Fund by submitting a sales contract, etc. in which the sale price of the site of each of the above apartment site of this case was uneasible to the bank (hereinafter “victimed bank”). In relation to the construction of the leased apartment of the National Housing Fund, each of them was acquired from the damaged bank.

C. The judgment of the court below

The lower court: (a) premised on the premise that the amount of loans approved by Nonindicted Company 2 as a loan from the National Housing Fund in relation to the construction of each of the instant rental apartments is divided into three items, namely, “mortgage security loan against apartment site,” “credit loan,” and “loans under the Guarantee of Korea Housing Finance Corporation,” as stated in its reasoning; (b) based on a false sales contract, etc., the lower court determined that the Defendants’ deception, which lowers the sales price of each of the instant apartment sites, affected the “mortgage site security loan” and “credit loan” of the damaged bank, was the Defendants.

The lower court acknowledged the Defendants’ assertion that there is no causal link between the Defendants’ deception through the submission of a false sales contract, etc. and the “issuance of a letter of guarantee by the Korea Housing Finance Corporation” and the “loan based thereon,” as stated in its reasoning, on the following grounds: (i) the National Housing Fund loan is determined by the housing price, including the site price, and thus, the amount of loans can be divided into three categories; (ii) if the apartment site price is lowered, the apartment site price is higher than the actual amount; (iii) the total amount of loans approved is increased; and (iv) the amount of loans is linked to the amount of loans based on the guarantee document issued by the Korea Housing Finance Corporation; and (v) the credit technology review document prepared by the damaged bank and submitted by the Korea Housing Finance Corporation; and (v) the sales price of the apartment site based on the corporate situation submitted by the Nonindicted Company 2 stated in its reasoning, the lower court found the Defendants guilty as to the existence of a false causal relationship between the Korea Housing Finance Corporation’s loan and the Korea Housing Finance Corporation’s loan transaction contract, respectively.

D. Supreme Court Decision

(1) According to the reasoning of the lower judgment and the evidence duly admitted and examined by the lower court, the following facts are revealed.

(A) Nonindicted Co. 2 obtained approval from the competent administrative authority for a housing construction project plan for constructing 196 apartment units and 510 rental apartment units in the ○○ District, and subsequently, obtained approval for a housing construction project plan for constructing 196 apartment units and 426 rental apartment units in the △ District.

(B) In relation to the new construction of each of the instant rental apartments in the name of Nonindicted Company 2, the Defendants filed an application for a loan of rental housing construction funds with the National Housing Fund from a bank damaged by the Fund trustee in the National Housing Fund, and submitted a false sales contract stating the sale price of each of the instant apartment sites. In relation to the loan of the ○○ District, three copies of a remittance receipt, which correspond to the unfresh trading price, were also submitted.

(C) In order to calculate the loanable amount, Nonindicted 4, a staff member in charge of the permanent branch of the affected bank, requested the Korea Appraisal Board, a separate appraisal corporation, to appraise each apartment site of this case. The Korea Appraisal Board had Nonindicted 5, an affiliated appraiser, evaluate the above site, and submitted to the damaged bank an appraisal report assessed as KRW 460,000 per square meter for the site of the ○○ District, and KRW 507,000 per square meter for the site of the ○ District.

(D) The damage bank service center set the assessment price for each apartment site of this case based on the appraisal price submitted by the Korea Appraisal Board. The site of ○○○ District was KRW 429,000 per 1 square meter, and the site of △△ District was KRW 481,000 per 1 square meter.

(E) As above, in accordance with the National Housing Fund’s work manual, the situation price by each apartment site of this case was determined, and the damaged bank set the “amount of loans per unit” after reviewing the adequacy of the lending limit per unit and reviewing the appropriateness of private rental housing construction funds within the scope of the “amount of loans available per unit” calculated as follows, and by multiplying the number of rental apartment units by the number of households of this case, determined the total amount of loans (the same amount as the amount obtained by deceit stated in the facts charged as KRW 26,030,000, 28,001,80,000 in ○○ district).

① “The amount of loans available per unit” is calculated by multiplying the net collateral price, which deducts preferential payment deposit from the price of housing per unit, by a regional loan rate. ② “The price of housing per unit” is calculated by adding the “price of housing per unit site” calculated by multiplying the price per square meter of the damaged bank in relation to the project site by the shares of housing site per unit, and the “price of housing per unit” calculated by applying the unit price of the standard construction cost determined by the damaged bank. ③ “the price of housing per unit” is the same amount as the “construction cost per unit”.

(F) The injured bank obtained the collateral for the loan amount equivalent to a certain percentage (60% of the site price of the bank and 50% of the total amount of the loan amount) from the elderly who had an opinion that the “amount of the loan per unit” was determined through these processes and that the loan can be made by the company’s review division, as collateral, from Nonindicted Co. 2. Of the remainder of the loan amount, the 90% of the loan amount was provided as collateral by the credit guarantee form issued by the Korea Housing Finance Corporation (not being provided as collateral for 10% of the remainder of the loan amount).

(G) The injured bank approved each of the instant loans with the entire loan amount (26,030,000,000 won in ○○○ District, and 28,001,800,000 won in △△ District). Nonindicted Company 2 also prepared a single loan transaction agreement (in ○○ District, two contracts were made with the part of 85 square meters or less in exclusive use area and the part of 60 square meters or less in 0 square meters) with the total loan amount as the loan amount as set out in the above loan agreement. Thereafter, the injured bank carried out each of the instant loans by means of making a payment in order according to the amount of the entire loan amount.

(h) Upon completion of each of the instant rental apartments, the victimized bank acquired additional collateral by setting up the first priority collateral for each of the instant rental apartments, and terminated the credit guarantee contract to the extent that the said collateral is secured.

(2) (A) The Defendants recognized the fact that they submitted to the damaged bank the false purchase and sale price of each apartment site of this case. Accordingly, the key issue is whether the damaged bank led to each of the instant loans due to the Defendants’ act of submitting the sales contract, etc. in which the purchase and sale price was lowered to the damaged bank, i.e., whether there exists a causal relationship between the Defendants’ act and each of the instant loans by the damaged bank.

(B) According to the above facts, the damaged bank set the total amount of loans on the basis of the “amount of loans per heading bank” and the “amount of loans per heading bank” based on the “price per heading bank”, i.e., the “price of a site per heading bank” and the “price of a building per heading”. Among them, the “price of a building per heading bank” is calculated by applying the standard construction cost as determined by the damaged bank, and is irrelevant to the value of each apartment site. Therefore, the part that may be affected by the false sales contract, etc. submitted by the Defendants is “price per heading site.” However, as seen earlier, the “price per heading site” is determined by the “price” stipulated by the damaged bank. Ultimately, the damaged bank can only be deemed to have caused the error of each of the loans in this case, and only if the damaged bank can be deemed to have determined the “price price” that did not reflect the adequate security value by determining the collateral value of the relevant site, it can be evaluated that the causal relationship between the acts of the victimized bank and the lending.

(C) However, in light of the following circumstances revealed by the facts and records as seen earlier, although the Defendants submitted a sales contract, etc. in which the purchase and sale price of each apartment site of this case was lowered, the damaged bank determined “price” based on the appraised value determined by the Korea Appraisal Board, a separate appraisal corporation, and there is insufficient proof by the prosecutor on the fact that the above appraised value was determined unfairly high due to the Defendants’ aforementioned act. Therefore, it is difficult to readily conclude that the damaged bank determined “price” which did not reflect the adequate value of the collateral.

① According to Article 122, etc. of the National Housing Fund Loan Business Manual, a sales contract or a remittance receipt concerning a apartment site is not an essential document to be submitted by a rental housing construction business operator at the time of filing an application for a loan (No. 1963 of the trial record). Nonindicted 4 stated in the first instance court that “Nonindicted 2 Company was unable to complete the registration of ownership transfer concerning each apartment site of this case, and thus, received a sales contract and a remittance receipt to confirm its ownership.”

(2) According to Article 10 of the National Housing Fund Loan Business Manual, the total price of a site, which serves as the basis for calculating the “land price per unit”, is calculated as “land area 】 publicly announced individual land price 】 quarterly land price fluctuation rate.” However, since it is not easy to compute the officially assessed individual land price and quarterly land price fluctuation rate, there are many cases where the loan applicant lowers the market price of a security in order to obtain a large amount of loans, the damaged bank has calculated the site price by requesting a separate appraisal corporation to appraise the collateral price offered by the loan applicant, instead of having the appraisal at a separate appraisal corporation.

③ In the court of first instance, Nonindicted 5, a certified public appraiser of the Korea Appraisal Board, who actually assessed each of the instant sites, conducted an appraisal of KRW 460,000 per square meter at the time of pricing on August 208, 2008, based on the market price (i.e., the time of the purchase of the instant site) and the time of stay at the time of the purchase; and (ii) Nonindicted 5, a certified public appraiser of the Korea Appraisal Board, who actually assessed each of the instant sites, conducted an appraisal of KRW 507,00 per square meter at the time of pricing on October 17, 2008. Reference to a sales contract submitted by the Defendants, but did not have any influence on determining the final appraised value.”

④ Since the instant appraisal was conducted under the status of the housing site, the land for the apartment leased in the ○○ district had already been converted into a housing site, there was no difference between the appraised value of the housing site for the examination of the sale price of the apartment for sale in lots and 3,000 won per one square meter. On the other hand, the leased apartment site in the △ district, where the instant appraisal was conducted before the said appraisal was still converted into a housing site, is at least 44,000 won per 1 square meter, or 75,000 won per 1 square meter, compared to the appraised value of the sale apartment for sale in lots. The Defendants also charged the crime of interference with business on the part of the Defendants, stating that “The sales contract, etc. against the sale price was submitted to the appraiser of the housing site and calculated excessively the appraised value of the housing site as to each of the above sites, thereby interfering with the affairs of calculating the upper price of the housing site. In view of the current status of the site at the time of the instant appraisal and assessment, it is insufficient to deem

⑤ The lower court determined that the Defendants, by submitting a false sales contract, etc., had an effect on the Defendants’ deception of the apartment site on the “house site mortgage loan” and “credit loan” of the damaged bank, was the Defendants. However, the causal relationship in fraud is not subject to the Defendants’ identity as to the normative evaluation and determination of the relation between deception and disposal.

6. The injured bank did not directly file a complaint against the Defendants on the charge of fraud, and the Defendants are paying the principal and interest of each of the instant loans at the time of the closing of argument in the lower court.

(3) If so, it is difficult to view that there exists a causal relationship between the Defendants’ filing a sales contract, etc. with the damaged bank and the instant loan by the damaged bank.

Nevertheless, the lower court found all of the charges guilty on the grounds indicated in its reasoning. In so doing, the lower court erred by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, or by misapprehending the legal doctrine on causation in fraud, etc., which affected the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit

2. As to Defendant 1’s ground of appeal on the violation of the Specific Economic Crimes Act (Embezzlement)

In the crime of occupational embezzlement, the term "an intention of illegal acquisition" means an intention to dispose of another person's property in violation of his/her duties for the purpose of pursuing his/her own or a third party's interest, such as his/her own property, and even if there is an intention to return, compensate or preserve it later, there is no difficulty in recognizing the intention of illegal acquisition (see Supreme Court Decision 9Do214, Dec. 8, 200, etc.).

For the reasons indicated in its holding, the lower court rejected the Defendant’s assertion disputing the Defendant’s intent of embezzlement or unlawful acquisition, on the ground that, as long as the Defendant voluntarily deposited the money that the Defendant released from the corporate account of Nonindicted Company 1 to pay the credit purchase amount to Nonindicted Company 6 (hereinafter “Nonindicted Company 6”) and allowed the Defendant to use it to repay the debt of Nonindicted Company 6, the crime of embezzlement is established against Nonindicted Company 1, and even if the Defendant paid the full amount of the promissory note issued in its name, the Defendant ultimately paid the full amount to Nonindicted Company 1, thereby ultimately, would not impede the Defendant’s intent of embezzlement or illegal acquisition, the lower court found the Defendant guilty of this part of the charges.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s aforementioned determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, or by misapprehending the legal doctrine on the intent of unlawful acquisition and conviction

3. As to Defendant 1’s ground of appeal on the violation of the Specific Economic Crimes Act (Misappropriation of trust)

For reasons indicated in its holding, the lower court determined that it is reasonable to view that the sales price of the five parcels of this case was unfairly excessive in light of the market price at the time of the sale on December 27, 2005, and that the amount of damages suffered by Nonindicted Company 1, the buyer, and the amount of profit acquired by the Defendant, the seller, should be at least KRW 4.8 billion and the amount of profit acquired by the Defendant, the seller, should be at least KRW 2,125,908,000, and rejected the Defendant’s assertion disputing this, and found

Examining the reasoning of the lower judgment in light of the relevant legal principles and the evidence duly admitted, the lower court’s aforementioned determination is acceptable. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, or by misapprehending the legal doctrine on the act of breach of trust and breach of trust, property damage, and the amount of profit under the Specific Economic Crimes Act

4. Scope of reversal

The judgment of the court below which rendered a single sentence on the ground that the part on violation of the Specific Economic Crimes Act (Fraud) with the above grounds for reversal is concurrent crimes with the remaining part of Article 37 of the Criminal Act. Thus, the judgment below should be reversed in its entirety.

5. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)