2018Gohap95 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud)

A

Errors in writing (prosecutions) and Kim Jong-soo (Trial)

Law Firm Members

[Defendant-Appellant]

January 24, 2019

The defendant shall be innocent.

The summary of the judgment against the defendant shall be published.

1. Summary of the facts charged

The defendant is the actual operator of B(hereinafter referred to as "B") as the chairperson of B(hereinafter referred to as "B").

The Defendant had no ability or intent to pay the money even if he/she borrowed money from the victim corporation D (hereinafter referred to as the "victim company") due to the failure of the business performance of B on October 2014 due to the commencement of the C sale procedure or the failure of B to participate formally in the above procedure. The Defendant did not have any ability or intent to pay the money, even if he/she borrowed money from the victim corporation D (hereinafter referred to as the "victim company").

Nevertheless, on October 6, 2014, the Defendant, at a hotel located in Seodaemun-gu Seoul Metropolitan Government, concluded that “F, as the actual operator of the victim company, has been determined to receive a large amount of investment at the end of the year from a foreign investment company in connection with C takeover, is not aware of the repayment, and if the Defendant borrowed KRW 3 billion, he/she will use it as the operating fund of the company and make a payment without a mold until the end of the year,” and acquired it by transfer from the victim company to B.

2. Summary of the defendant and his defense counsel

On October 6, 2014, the defendant presented the Investment Agreement (hereinafter referred to as "G") in the name of G (hereinafter referred to as "G") and B as the chairperson who actually operates B, and on October 15, 2014, the fact that the defendant received 3 billion won remittance from the victim as the operating fund of B is recognized.

However, the Defendant did not say that the investment of the U.S. investment company was confirmed, and only presented to F the G Investment Agreement as it is. At the time, B agreed to receive investment of USD 400 million from G that is planned to be established by H, the U.S. investment company, and was also selected as a bidder on November 12, 2014 by participating in the C Sale Tender around November 2014. However, on December 19, 2014, B was excluded from the preferred bidder and did not receive an investment from G.

In addition, at the time, B did not have sufficient operational funds to the extent that it is impossible to respond to the demand of the existing creditors. On December 5, 2014, A Co., Ltd. (hereinafter referred to as “I”) filed an application for voluntary auction on the real estate owned by B, A, in order to recover advance payment, and due to the commencement of the rehabilitation procedure of B on February 6, 2015, it was merely a failure to pay 3 billion won to the victim. Accordingly, the Defendant did not have any intention to obtain money.

3. Facts of recognition.

According to the evidence duly adopted and investigated by this Court, the following facts may be recognized:

① On March 17, 2014, F, a Chinese national, established a victim company to make an investment in real estate in Korea (in investigation records, 3:26 pages of investigation records, hereinafter referred to as "investigation records") and indicated only several rights.

② On April 14, 2014, the Defendant received a proposal from J to accept C with foreign capital invested in B, and delegated the duties related to acquisition to K Co., Ltd. operated by J.

③ According to the audit report on the financial statements in 2012 prepared by L Accounting Corporation B (formerly changed: Ma), the total amount of the capital as of December 31, 2012 is 20,632,49,89,640 won; the total amount of the net loss in 2012 is 13,946,04,747 won; according to the audit report on the financial statements in 2013, the total amount of the capital as of December 31, 2013 was 45,014,142,089 won; 96,785,38,3809 won; 3,424,76,788, and 208, the total amount of the net loss per year was 196,428,970 won; and the total amount of the net loss was 3,424,75,788 won; 2018.

A around September 2014, the board of directors of A made a decision to invite investors through the issuance of convertible bonds to raise funds for the management of the company, and this was known to P, an officer of B, who is an accounting company, that B is inviting investors (4 right 764 pages).

⑤ P was aware of the F’s introduction of Q, which had been operating the F’s hotel in China, by leasing the F’s hotel in China, and the F’s intent to invest in Korea through Q in China.

④ As the president of the Chinese roadside R on April 2014, F entered Korea to attend S dialogues, the Defendant, P, and 0 entered Korea. On October 6, 2014, F visited B offices, and visited the Defendant, P, and 0 met. From R including T on October 2014, it is well aware of the fact of the Republic of Korea and the company circumstances, i.e., how to lend a large amount of money is well known, F sent an intention not to make an investment to the Defendant through P (4°794 pages), and Q in China (6 pages). As such, the Defendant, P, and P, and P, while gaining F, found it to be the room of the E hotel project, the Defendant and the Defendant, while signing the agreement, expressed that the Defendant and the other party to the investment will not make an investment in the Defendant through P, 200,000, 100,000, 10,000, G, 30,000.

7) After dividing the Defendant’s two stories, F signed an agreement (hereinafter referred to as “instant agreement”) containing the following contents:

Agreements

1. The amount of investment shall be paid in the Chinese People's Union, and the amount of investment shall be paid in the Chinese People's Union even when a request for early repayment is made in accordance with the contents of this agreement;

2. Where an investor (referring to a victim) files a claim for early repayment, he/she may claim with the company at any time after December 31, 2014, and guarantee payment;

3. In cases of paragraph (4) above (to be deemed to be a clerical error in paragraph (2)), interest shall be calculated at the interest rate of 8% per annum and paid.

4. If an investor continues to hold the shares without claiming early on or after December 31, 2014, only half of the initial amount of the investment shall be paid at one’s request, and the investor agrees to recover immediately more than half of the convertible bonds, and such transactions shall be made in a convenient country with mutual agreement between both parties.

(hereinafter omitted)

④ On October 15, 2014, F remitted KRW 3 billion to B, and B issued convertible bonds of KRW 3 billion to the victim company on October 15, 2014. P was paid KRW 30 million from the Defendant in return for attracting investment.

9. B was selected as an eligible bidder on November 12, 2014 by participating in the C sale bid at around November 2014, but was excluded from eligible bidders on December 19, 2014.

xi On December 5, 2014, I filed an application for voluntary auction on B’s real estate based on the advance payment claim against B, and B filed an application for commencement of rehabilitation proceedings with the Seoul Central District Court on January 7, 2015 (3rd page 111).

4. Determination

According to the circumstances, such as the fact that foreign company’s investment in a foreign company was nonexistent and the rehabilitation procedure for B was commenced as the victim company borrowed KRW 3 billion from the victim company, there is doubt that the Defendant did not have any repayment ability and intent, and that the Defendant did not make a false statement as to whether he/she was finally determined to receive an investment to F by making use of the G Investment Agreement written in English.

However, the establishment of a crime of fraud shall be determined at the time of the act, and the defendant cannot be punished for fraud on the ground that the change in economic circumstances after the act leads to a state of default (Supreme Court Decision 2008Do5618 Decided September 25, 2008).

Examining the following facts and circumstances acknowledged as evidence duly adopted and investigated by the court in light of the aforementioned legal principles, it is insufficient to recognize that the facts charged in this case are proven beyond reasonable doubt-how by the evidence submitted by the prosecutor alone.

(a) The defendant's ability to repay and his intention to repay;

Although the defendant thought that the victim company can pay 3 billion won to the victim company even if the investment is not made by the U.S. investment company, the defendant is likely to fail to pay 3 billion won to the victim company due to the commencement of the rehabilitation procedure B in the light of the funds by the application for a sudden auction.

① Although the financial status at the time of B cannot be deemed good as seen earlier, since the purpose of and criteria for the rehabilitation investigation report, which was an opportunity to correct the financial statements, differs from the report on external audit under the Act on External Audit of Stock Companies, the rehabilitation investigation report was prepared from a compensatory point of view for the purpose of the investigation. Even if the revised financial statements were to be followed, the total amount of the capital as of December 31, 2013 is KRW 20,014,928,871, and the amount of the capital as of February 6, 2015, adjusted by the verification due to the application for rehabilitation, as of February 6, 2015, as of February 2015, the asset amounting to KRW 5.7 billion, and around KRW 10,000,000,000,000 per year, and KRW 1,46,000,000,000,000 won was anticipated to be repaid around October 31, 2014.

② It is difficult to view that the Defendant did not have any intent to repay to the Defendant. The Defendant used the borrowed KRW 3 billion for the operating fund B, and the Defendant actually deposited KRW 3 billion in B by exercising the preemptive right on October 2, 2014 (Investigation Record 1218 pages). The Victim Company received dividends in cash equivalent to KRW 240 million in the rehabilitation procedure B, and acquired KRW 152,408 in the B’s shares through a stock conversion, as well as the Defendant paid KRW 140 million with personal funds to the Victim Company, separate from the rehabilitation procedure.

③ Under the circumstances where “I’s financial resources are not good in this Court, B took over the article that B takes over, and proceed with the procedure of voluntary auction application without prior notice for the collection of claims against B when B entered the U.S. capital, and the procedure of application for auction was progress as soon as possible. B stated to the effect that “A’s obligor falls under more than two to three parts, but the outstanding amount falls under more than the ordinary level at the time of application for auction in 2014.” There is no interest in the instant case, and there is credibility in the statement, and in light of these V’s statement, the Defendant could not be anticipated at the time of borrowing KRW 3 billion from the victim company.

B. Whether the F is deceiving

It is difficult to recognize that the defendant was deceiving F to receive investment from the U.S. investment company until the end of the year using the G Investment Agreement written in English.

① The Defendant’s investment in B of the U.S. investment company was determined by F. F. F. F. F. F. F. “The Defendant had an investment commitment that the Defendant would make an investment in W in W.” In doing so, the Defendant and two persons were in the room. On the other hand, the Defendant did not understand the document due to the lack of English distribution. The Defendant borrowed money up until December 31, 2014 (8 pages of the examination of witness), and C’s acceptance relation had already been completed by December 31, 201 (10 pages of the examination of witness), and the Defendant was made a statement to the effect that “the record of the examination of witness”) was made to the effect that: (a) the Defendant was 40 billion won from W to 40 billion won; and (b) the Defendant became an investment (11th page of the examination of witness).

However, according to F’s statement, F is difficult to believe that the G Investment Agreement written in English is invested in B without understanding the English, and it is hard to believe that it is an investment (On the other hand, F made a statement that it is known of the alpha of English, and G Investment Agreement is written in the name of G, and there is no indication that it is possible to mislead W.).

In addition, the G Investment Agreement states that it is not binding, and there is no evidence that the defendant was aware of the F's English history level.

On the other hand, F had a positive position with respect to the lending of funds to B, and it cannot be ruled out the possibility of lending funds to the expectation that the value of stocks may increase significantly by accepting C with the trust of the size of the company B and accepting C. According to the financial statements publicly announced in China, F verified the financial statements publicly announced in China, F may be repaid in full at F’s option, holding half of convertible bonds as it is, and F may have a expectation to convert half of convertible bonds into stocks, if acquired by C.

② On October 27, 2014, immediately after borrowing KRW 3 billion from the victim company, the Defendant disclosed the victim company’s resolution for capital increase with G on October 27, 2014, stating that “The Defendant would enter into a final contract with G, a third party subject to allocation of capital increase with G, and agreed on detailed investment terms and conditions. Therefore, the Defendant would not reach the final contract during the future consultations, or would be able to amend the contents of the capital increase with new shares. In this regard, the Defendant would be able to immediately re-announce the contents of the capital increase plan.”

③ On October 27, 2014, G announced that it was an investment company established in New York in October 2014 for the participation in capital increase with capital increase, but G was merely an investment company that promised to be established under the condition of B’s acquisition. However, it cannot be deemed as a ethical reason to establish an investment agreement to establish a fund to be raised under the condition of C acquisition, and in light of the circumstances in which C acquisitions and foreign countries have mainly been in charge of attracting investment, it cannot be readily concluded that the Defendant had the intent to deceive the Defendant solely based on the foregoing circumstances.

5. Conclusion

The facts charged in this case constitute a case where there is no proof of facts constituting the crime, and thus, is pronounced not guilty pursuant to the latter part of Article 325 of the Criminal Procedure Act, and a summary of the judgment of the defendant is publicly announced pursuant to

The presiding judge, the highest judge;

Judges

Judges Shin Jae-ho