2018Gohap858 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud), fraud;

Violation of the Act on Regulation of Conducting Fund-Raising Business without Permission

A

The transfer file (prosecution) and the leaptable exchange (public trial)

Law Firm Barun (LLC)

Attorney Yellow-gu et al.

February 20, 2019

A defendant shall be punished by imprisonment for not less than two years and six months.

except that the execution of the above sentence shall be suspended for four years from the date this judgment became final and conclusive.

The defendant shall be ordered to provide community service for 160 hours.

Criminal History Office

Facts of the premise

B The representative director of the E Co., Ltd. (hereinafter referred to as “E”) with the purpose of cultural fund business located in the 14th, Gangnam-gu Seoul Building D, and from the same company name, the entry of “stock company” was omitted), who takes charge of overall business activities, such as planning and promotion of the business. The Defendant took charge of the management of the E’s vice president, such as finance, etc., and the Defendant took charge of F from March 3, 2016 to October 2016. G took charge of the business activities of raising investment funds as a business director of E from March 15, 2016 to March 29, 2017.

[Public Offerings by Defendants B, and F - Fraud]

B Around January 2016, while operating H, a corporation with a telegraphic transfer of E, is not sufficient business funds, and the H’s capital is merely 200 million won, and even though it is well aware of the fact that the investment funds received from subordinated investors have no business earnings and are paid as profits to senior investors, B would like to attract a new investment by changing the name of the corporation into “Co. E”, but the Government of the Republic of Korea invested in and plans to commit a crime of receiving investment funds managed by I Co., Ltd from many unspecified investors by receiving investment funds from an unspecified number of investors, and then attract the Defendant and F with the “the mother fund managed by the Government of the Republic of Korea and I”. E would like to suggest that “I will pay high-rate profits for one year and receive the principal after one year.”

F was aware of the capital and financial situation of H as it has invested in H at the time and did not receive the principal and profits from H, and the Defendant was aware of the fact that the E’s capital is less than KRW 500 million and that even if the E’s capital has no other business profit, it would be able to pay the principal and profits even if the investment was received due to the lack of business profit, and would receive money from many unspecified investors through the head of the business department G, etc., and would receive it by fraud.

【Public Offering of Defendant B, F, and G – Violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission】

The defendant, B, and B made a form of an investment agreement containing "payment of fixed earnings of at least 2% per month of the principal guaranteed and at least 2% per month" to G, "if the amount of investments is recruited in an amount equivalent to 2.5 billion won per month, the company will act as the head of the headquarters and pay monthly profits of 25 billion won per month and 2% of the amount of investments" to G, with the consent of the above proposal, and the defendant, B, F, and G are willing to engage in business of non-registered new revenues.

Criminal facts

1. Joint Crimes between the Defendant and B and F – Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and fraud;

Around March 15, 2016, the Defendant and B and F: (a) at the above E office through G: (b) in fact, E’s capital is less than KRW 500 million; (c) inasmuch as there is no intent or ability to return the principal of the investment money or to pay the profits therefrom due to the lack of business profits, E is a juristic person holding 10 billion capital; and (d) in the event of investment of 30% from investors, the rest of 70% can be subsidized from the Government; (e) production and export of film with money and return the profits therefrom to investors. In addition, the Defendant and B and F are scheduled to engage in a profit-making business by accepting the broadcasting station for job creation of K, and the representative director is a person specialized in M&A; (d) purchase of stocks at low prices; and (e) sale of stocks at low prices; (e) return 10% of the principal and 10% of the investment amount from 70% of the total amount to 10% of the investment account; and (e.g. 16% of the total amount of the funds).

Accordingly, the defendant, in collusion with B and F, acquired money from the victims (as stated in the crime list Nos. 10, 11, 27, 31, 38, 43, 48, 49, 50, 69, 70, 108, 109, 110, 15, 155, 156, 165, 183, 223, 226 through 234, 236, 239, 289, 570,000 won, 50,000 won, 950,000 won, 50,000 won, 50,000 won, 50,000 won, and 50,000,000 won, respectively, for the victim P, as stated in the crime list No. 2 and F.

2. The defendant, B, F, and G co-principal - Violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission

No one shall engage in a business of raising funds under the pretext of investments, etc. under an agreement to make payment of all or more investments in the future from many and unspecified persons without obtaining authorization or permission under finance-related Acts and subordinate statutes.

The Defendant, in collusion with B, F, etc., did not obtain authorization or permission as described in the preceding paragraph, and received KRW 7,764,10,000 in total from 112 persons, such as J, etc., over 310 times from March 15, 2016 to October 27 of the same year, in the same manner as the list of crimes in the preceding paragraph, as described in the attached Table.

Accordingly, the Defendant conspiredd with B, F, etc. to receive without registration.

Summary of Evidence

1. Partial statement of the defendant;

1. Each legal statement of witness B, F and Q in each part;

1. Legal statement of witness P;

1. Each prosecutor's protocol of examination of B and F (including substitute part) of the prosecution;

1. Statement by the prosecution concerning P and Q;

1. Each police statement on R, S, T,O, P, U, V, W, X, and G (including each accompanying material);

1. Written statements;

1. Each complaint (including each accompanying material);

1. Each investigation report (including the receipt of a written complaint filed by an additional complainant, the submission of suspect B additional materials, the submission of suspect F reference materials, the submission of suspect B evidentiary materials) (including accompanying materials);

1. Data on account transactions replies, each investment agreement and each deposit list, and the letter of introduction to the company;

Application of Statutes

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

Article 3(1)2 of the former Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Amended by Act No. 15256, Dec. 19, 2017; Act No. 15256, Mar. 20, 2018); Article 347(1) and Article 30 of the Criminal Act (including the fraud of victims, N,O, and P; each victim); Articles 347(1) and 30 of the Criminal Act (including fraud of victims of money; each victim; each victim’s choice), Articles 6(1) and 30 of the Act on the Regulation of Similar Collection of Money; and Article 30 of the Criminal Act (the selection of imprisonment with prison labor), Article 30 of the Criminal Act (the occupation of similar act, all together with imprisonment)

1. Aggravation for concurrent crimes;

Article 37 (former part of Article 37, Article 38 (1) 2, and Article 50 (Concurrent Punishment of Specific Economic Crimes (Fraud) of the Criminal Act for Victims P with the largest penalty and penalty)

1. Discretionary mitigation;

Articles 53 and 55(1)3 of the Criminal Act (The following consideration for the reasons for sentencing):

1. Suspension of execution;

Article 62(1) of the Criminal Act (The following grounds for sentencing has been repeatedly taken into consideration for favorable circumstances)

1. Social service order;

Article 62-2 (1) of the Criminal Act

Grounds for conviction

1. Summary of the defendant's assertion

The Defendant, while working for the vice president in the position of the vice president in E, committed the crime of B, F’s fraud and fund-raising to a certain extent, but only provided explanation on the manufacture of the Rama’s “Z” and provided explanation to investors in the course of performing the work of producing the Rama’s “Z” and did not conspired with B, F, by actively participating in the fund-raising work.

2. Determination

A. Comprehensively taking account of the various evidence duly adopted and examined by this Court, the following facts and circumstances are revealed.

1) Around September 2015, B engaged in media business, such as the operation of a broadcasting station and advertising planning, was introduced by the Defendant, who had worked as the head of the Fund Management Headquarters in AA, a similar recipient company, through the branch around September 2015 while seeking a large number of debts. Around November 2015, H office was set up and the Defendant requested the Defendant to raise funds, etc. for the production of the drama.

2) From around that time to March 2016, the Defendant, as a director in charge of the capital of the said company, was in charge of the production of drama, etc., and around January 2016, the Defendant introduced F, who was working as a standing director in the said AA, as a person capable of attracting a large number of investors, to B. From February 2016, F, up to February 2016, invested KRW 150 million in H, and introduced G, a branch, to the Defendant and B.

3) Upon the failure of the public performance project invested by H, B changed the trade name around March 4, 2016 to E, and still takes charge of the representative director and the chairperson. The Defendant, the vice president, the vice president, and G were in office as the chief of the headquarters.

4) The E’s business sector was largely divided into entertainment, mobile game, food service, and finance, but investment was made in the production of film “AB”, “D” and “Z” as the entertainment business, but there was no particular profit. The “AC” of a company running mobile game business was merely lent the name of B from the branch, and the operation of “AD”, which is a food-based business, was also discontinued. Under these circumstances, the Defendant, B, and F operated the company by means of repaying the principal and interest of existing investors with the investment funds introduced in new form by explaining the investment as indicated in its reasoning.

5) In this Court, B stated in this Court that “the Defendant took overall control of the work of labor and fund management, drama and film production on behalf of the outside party,” and that “the necessary funds were not directly contacted by F through the Defendant, and F.” (B witness examination record page 4, 23), and the investigative agency ordered that “the Defendant decided to promote the project under the name of the Defendant and the Defendant, and if the Defendant did not remain in the company account, the Defendant would not remain in the company account) raise investment funds.”

The defendant requires the amount of KRW 1.5 billion for the production of the Z, which is the amount to be divided F.

I stated that it would be said to do so (Evidence No. 1, 339-340, 352, 542).

6) In this court, F explained about the business performance and profitability of the Company B from the Defendant at the time of serving as a director, and even if the Company was to be employed as a director, F did not directly appear as the Defendant and B. An investor’s explanation about the business performance was given to the Plaintiff on the basis of the company letter (Evidence No. 4: 1225 pages) received from the Defendant, etc., and the Defendant made it difficult to answer. The Defendant made it difficult to answer the explanation of the business performance against the head of the headquarters and the head of the headquarters at the Abssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss.

7) P, which invests a total of KRW 1 billion in E and works as the head of the second head of the above company, consistently, at the time of investing in the above company, the defendant provided relevant data by providing an overall explanation about the financial status of the company, the business that was being promoted and its profitability, and the financial capacity of B, etc., and the defendant stated that there was a timely statement that there was a correction of data by computer (P witness examination record 2,8 pages).

P directly paid 500 million won out of the above investment funds to the defendant (3 pages of the P Examination Record, B Examination Record No. 15-16 pages), victim AE, and AF seems to have received an explanation from the defendant related to the investment (Evidence No. 5, No. 2180 pages of evidence No. 2180).

B. In light of the relationship between the Defendant and B, F, etc., the Defendant’s duties and roles entrusted to the Defendant in E, and the degree of the Defendant’s participation in the process of attracting investment funds, it is reasonable to view that the Defendant shared the commission of the crime of fraud and fund-raising through functional control under the conspiracy with B, F, etc.

Reasons for sentencing

1. Scope of applicable sentences under Acts: Imprisonment for one year and six months to twenty-two years; and

2. Scope of recommended sentences according to the sentencing criteria;

(a) Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;

[Determination of Punishment] Form 4 (at least five billion won, less than 30 billion won)

[Special Aggravation] Mitigation element: Where a victim is fully responsible for the occurrence of a crime or the expansion of damage even: Where the victim has committed a crime for an unspecified or large number of unspecified victims or repeatedly over a considerable period of time.

[Scope of Recommendation] Four to Nine years of imprisonment (Basic Area)

* Form 1 rise as a result of adding up the same kind of competition

(b) Whether the sentencing criteria are not set for a violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission;

(c) Scope of recommendations according to the guidelines for handling multiple crimes;

Since the crimes for which the sentencing criteria are set and the crimes for which the sentencing criteria are not set are concurrent crimes under the former part of Article 37 of the Criminal Act, they shall be based on the lower limit of the sentencing criteria for the crimes for which the sentencing criteria are set.

3. Determination of sentence;

The crime of this case is that the defendant received investment money from many unspecified persons on the ground of high rate profits from the company whose main business is the so-called cultural letter-related business. The number of victims reaches 110 persons and exceeds 7.7 billion won, and the amount of damage exceeds 7.7 billion won. As vice president of the above company, the defendant was involved in the crime of this case, such as delivering business instructions and reports between the representative director B and the general directorF, and conducting business along with them, and there is a history of punishment for the crime of receiving the same kind of business in the past.

However, the victims who have decided to make an investment without confirming the specific contents of the business and the profit structure in a short period are also partly responsible for the occurrence and expansion of damages. Unlike F, the Defendant merely received fixed wage of KRW 1.7 million per month, and it is difficult to view that the Defendant shared profits from the crime by receiving business allowances or receiving investment funds, etc., and the Defendant appears to have actually endeavored to engage in profit-making business such as the manufacture of drama, etc., which is favorable to the Defendant.

In addition to these various circumstances, the sentencing conditions such as the defendant's age, character and conduct, relationship to victims, motive, means and consequence of the crime, etc. are comprehensively taken into account, and the judgment of the same sentence as the order is set out beyond the lower limit of the sentencing guidelines, and the execution thereof is suspended, and the social service is ordered for considerable time in order to give an opportunity for the crime of deceiving through blood dance.

The presiding judge and judges;

Judges Kim Young-ho

Judgment of the Prosecutor

1) On February 5, 2016, the capital was increased to KRW 500 million, and the trade name was changed to “E” on March 4, 2016.

2) B stated in this court that “the Defendant was able to access the company account and authorized certificate (OTP)” and that “it was possible to verify the status of investment revenue and revenue payment, etc.” (B examination record page 27-28 pages).

3) At the time, F stated that at the time, the Defendant provided a subsidy from the Government and provided an explanation about the “ smart farm business,” which manages the vinyl by an automation system, such as the business of displaying works of a master cartoon, the business of displaying works of a master cartoon, and the business of taking over K.

4) The Defendant asserted that consultation with B was made only with respect to the production of the Z from the time of entry into the Z and Q to only carry out the business related to the production of the Z, and based on that ground, the service contract was concluded with E on March 1, 2016 (Evidence No. 3: evidence No. 599). However, the Defendant stated that (i) around November 201, 2016, the Defendant posted his seal on the above service contract at the Defendant’s request, and (ii) around March 1, 2016; (iii) it is difficult to view that the Defendant’s business was not carried out to be carried out by the 31st of the 3rd of the 3rd of the 2016-2nd of the 2016th of the 2016th of the 3rd of the 3rd of the 2016th of the 3rd of the 2016th of the 2016.

5) B claimed that the Defendant paid KRW 300 million to the Defendant, but there is no specific data supporting this.