[1] Where a person falling under any subparagraph of Article 174(1) of the former Financial Investment Services and Capital Markets Act trades or makes any other transaction with a specific securities, etc. in the status of recognizing the material nonpublic information, the standard for determining whether the person made the transaction using the material nonpublic information

[2] Where the custodian disposes of the property against the owner's interest for the benefit of himself/herself or a third party, whether the custodian can recognize the intent of unlawful acquisition of the property (affirmative)

[3] In a case where the facts charged before and after the amendment of the indictment are identical to factual relations, whether the appellate court can amend the indictment in its appellate trial even though the new indictment is not different from the new indictment (affirmative)

[1] Article 174(1) of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013) / [2] Article 355(1) of the Criminal Act / [3] Article 27(1) of the Constitution of the Republic of Korea; Articles 298(1) and (4), and 370 of the Criminal Procedure Act

[1] Supreme Court Decision 2016Do10313 Decided January 12, 2017 (Gong2017Sang, 422) / [2] Supreme Court Decision 2004Do5904 Decided December 9, 2004 (Gong2005Sang, 147), Supreme Court Decision 2013Do658 Decided August 30, 2016 (Gong2016Ha, 1564) / [3] Supreme Court Decision 94Do3297 Decided February 17, 1995 (Gong195Sang, 1508), Constitutional Court en banc Decision 2010Hun-Ba128 Decided May 31, 2012 (Gong18, 1012)

Defendant 1 and one other

Defendants and Prosecutor (Defendant 2)

Law Firm Geopyeong et al.

Seoul High Court Decision 2015No3421 decided May 17, 2017

The part of the lower judgment against Defendant 2 is reversed, and that part of the case is remanded to the Seoul High Court. Defendant 1’s appeal is dismissed.

1. As to Defendant 1’s ground of appeal

A. Of the instant facts charged against Defendant 1, the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) related to the payment of fine

① The lower court stated that Defendant 2’s withdrawal from the account in the name of Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”) was in accordance with Defendant 1’s order with regard to the period during which the fine was imposed on Defendant 1; Nonindicted Co. 2’s statement also corresponds to this; ② if the representative director of the company ordered the director managing the company’s funds to pay the fine to a private person, it is reasonable in light of the empirical rule to view that he had dolusence or implied consent on the fact that the company’s funds would resolve the problem of fine with the company’s funds unless the representative director given specific instructions; ③ On the other hand, Defendant 1 instructed Defendant 2 to pay the fine with the funds in his name of his own name account, and it was difficult to accept the said instructions; however, it is difficult to find out that Defendant 1’s direct withdrawal of the borrowed account other than some borrowed accounts, and it was difficult to find out the amount of the fine’s funds in light of the following circumstances: (a) it was difficult to find out that Defendant 2 did not have any reasonable reasons for the payment.

Examining in light of the relevant legal principles and evidence, the lower court did not err in its judgment by misapprehending the legal doctrine on the degree of proof in a criminal trial, or by exceeding the bounds of the principle of free evaluation of evidence by failing to exhaust all necessary deliberations, and thereby adversely affecting the conclusion of the judgment, contrary

B. Violation of the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) on the use of each material nonpublic information

In the event that a person falling under any subparagraph of Article 174(1) of the former Capital Markets Act (amended by Act No. 11845, May 28, 2013) trades or makes any other transaction with a specific securities, etc. while recognizing the material nonpublic information, such transaction may be deemed to have been made using the material nonpublic information, barring special circumstances, if it is deemed that the material nonpublic information was one of the factors that caused the transaction, even if the transaction was not entirely made due to the material nonpublic information (see, e.g., Supreme Court Decision 2016Do10313, Jan. 12, 2017).

The court below found Defendant 1 guilty of this part of the charges on the ground that it can be found that Defendant 1 used material nonpublic information in trading and allowed Nonindicted 3 and Nonindicted 4 to use it for non-indicted 4, in light of the following facts: (a) Defendant 1 received a report from Defendant 2 on the occurrence of KRW 4 billion in the settlement of accounts for the business year 2009; (b) sold the shares of Non-indicted 1; (c) the quantity of the shares sold; and (d) the amount of losses incurred therefrom; (d) Defendant 1 also notified that the price drop of the relevant company when the disclosure was made; (d) Defendant 1 and Non-indicted 3, and Non-indicted 4; (e) the time when Defendant 1 informed Nonindicted 3 and Non-indicted 4 of the occurrence of the company’s deficit; and (e) the timing and scale of disposal of the shares by Nonindicted 4.

In light of the aforementioned legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine on the establishment of a crime of violation of the Capital Markets Act, or by exceeding the bounds of the principle of free evaluation of evidence by failing to exhaust all necessary deliberations regarding causation, intentional act, and nonpublic information, contrary to what is alleged in the grounds of appeal

2. As to Defendant 2’s ground of appeal (excluding the ground of appeal on the lower court’s determination on sentencing)

As to Defendant 2’s violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (hereinafter “Aggravated Punishment, etc.”) among the facts charged in the instant case against Defendant 2, the lower court found Defendant 2 guilty of this part of the facts charged on the ground that: (a) the purpose of “for profit” under Article 8-2(1) of the Aggravated Punishment, etc. of Specific Crimes Act is to obtain wide economic benefits; and (b) the purpose of obtaining economic benefits by evading taxes through transaction in taxation data is to obtain economic benefits or illegal benefits; (c) without supplying or being supplied with goods or services; and (d) the purpose of obtaining economic benefits by issuing or receiving a tax invoice pursuant to the Value-Added Tax Act is to obtain economic benefits (see, e.g., Supreme Court Decision 2015Do146, May 28, 2015). According to evidence, it is recognized that Defendant 2 issued or issued a false sales and purchase tax invoice, and even according to Defendant 2’s statement, Defendant 2 had awareness that it would artificially increase sales and interests of Nonindicted Company 1.

In light of the relevant legal principles and records, the lower court did not exhaust all necessary deliberations, as otherwise alleged in the grounds of appeal, nor did it err by misapprehending the relevant legal principles, thereby adversely affecting the conclusion of the judgment.

3. As to the Prosecutor’s Grounds of Appeal

A. The lower judgment’s embezzlement No. 17 related to the crime sight table No. 17

The lower court acquitted Defendant 2 on the ground that the part No. 17 of the attached Table No. 17 of the lower judgment, which was added as changes in the indictment, among the charges of this case against Defendant 2, constitutes a case where there is no proof of a crime.

In light of the relevant legal principles and records, the lower court did not err in its judgment in violation of the rules of evidence.

B. The point of embezzlements related to No. 18 of the crime sight table No. 18 attached to the judgment below

1) The crime of embezzlement is established when a person who keeps another’s property embezzleds the property (see, e.g., Supreme Court Decision 2004Do5904, Dec. 9, 2004). In a case where the custodian disposes of the property against the owner’s interest for his/her own or a third party’s interest, embezzlement is established when there is an objective act that is recognizable to the outside of the intent of unlawful acquisition (see, e.g., Supreme Court Decision 2013Do658, Aug. 30, 2016).

2) The summary of this part of the facts charged is that on October 4, 2011, Defendant 2 had Nonindicted Co. 5 (hereinafter “Nonindicted Co. 5”) pay KRW 100 million as a loan from the Nonindicted Co. 1’s account in the course of carrying out the business of Nonindicted Co. 1’s capital, and embezzled by arbitrarily using KRW 100 million after having been issued from Nonindicted Co. 5 on October 7, 2011.

3) On October 4, 2011, the lower court acknowledged the fact that Defendant 2 received KRW 50 million from Nonindicted Company 5’s account to Nonindicted Company 6’s account on the same day after he/she transferred KRW 100 million from Nonindicted Company 5’s account to Nonindicted Company 6’s account on the same day, on October 5, 201, on the premise that Defendant 2 was changing to the purport that it would raise funds in accordance with Defendant 1’s order, not from his/her own embezzlement by himself/herself, (i) and (ii) he/she received KRW 100 million from Nonindicted Company 5,00,000 from Nonindicted Company 7’s father’s account on October 6, 201, and (iii) he/she received KRW 170 million from Nonindicted Company 12,500,000 from Nonindicted Company 6’s account on the same day, and (iv) on October 7, 2011, Defendant 200 million from each of the said accounts.

4) Examining the above facts in light of the legal principles as seen earlier, Defendant 2 requested Nonindicted 6 to transfer KRW 100 million from the Nonindicted Company 1’s account to the Nonindicted Company 5’s account, and immediately withdraw and return it. Accordingly, the KRW 100 million, which was returned from Nonindicted Company 6, was mostly used by Defendant 1’s representative director, not Nonindicted Company 1 but Defendant 1’s representative director, who was the Nonindicted Company 1’s representative director. As such, there is considerable room to deem the above Defendant 2’s act as an act of realizing the intent of unlawful acquisition by disposing of property contrary to the owner’s interests for his own or a third party’s interest, and constitutes embezzlement.

5) Nevertheless, the lower court found Defendant 1 not guilty of this part of the facts charged on the ground that it is difficult to deem this part of the facts charged solely on the ground of the fact that most of the above facts were used by Defendant 1’s branch figures and Defendant 2’s change of lawsuit purporting to raise funds in accordance with Defendant 1’s instructions. However, according to the legal doctrine as seen earlier, the lower court erred by misapprehending the legal doctrine on the establishment of embezzlement, thereby adversely affecting the conclusion of the judgment, and the allegation contained in the grounds of appeal

C. Whether the application for changes in indictment is legitimate

1) Article 298(1) of the Criminal Procedure Act provides that with respect to the application for changes in indictment by the prosecutor, the court shall permit the application for changes in indictment to the extent not impairing the identity of the facts charged. Article 370 of the Criminal Procedure Act provides that the above provision shall apply mutatis mutandis to the trial proceedings in the appellate trial, but does not separately provide for the time of changes in indictment. Meanwhile, Article 298(4) of the Criminal Procedure Act provides that the court may, ex officio or upon the request of the defendant or his defense counsel, suspend the trial for a period necessary for the defendant to prepare for necessary defense, by ruling.

Therefore, even if the revised facts charged are identical to the facts charged prior to the amendment, the appellate court may also amend the indictment, even if it is not different from the new facts charged (see Supreme Court en banc Decision 94Do3297, Feb. 17, 1995, etc.). Even in the appellate court, since the facts constituting the basis of the revised facts charged are allowed only to the extent that the facts charged in the first instance and the basic facts are identical, it is already examined in the first instance court, and it is difficult to view that the modification of indictment in the appellate court is deprived of the interests of the defendant in the instance (see Constitutional Court en banc Decision 2010Hun-Ba128, May 31, 2012).

2) In this case, the prosecutor applied for the amendment of a bill of amendment to the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) to add the facts in relation to Defendant 2’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement), among the facts charged against Defendant 2 prior to the 8th trial of the court below. However, the court below rejected the application for the amendment of the Act on the 10th trial date on the 10th trial date, on the ground that “the identity of the facts charged is recognized, and the amendment of the indictment is not unlimited.” The above application for the amendment of the Act is too late, and the contents of the modified facts are added to a number of crimes, increase the total amount of embezzlement, and increase the total amount of embezzlement, and it is difficult to complete the trial within a short time due to the removal of the act, and thus, it is difficult for the prosecutor to do so

3) However, in light of the above legal principles, if the prosecutor applied for changes in indictment, the appellate court should first examine whether the facts charged are identical, and then grant permission for changes in indictment if its identity is recognized, but the court below's rejection of the above reasons erred by misapprehending the legal principles on changes in indictment, thereby affecting the conclusion of the judgment. The ground of appeal assigning this error is with merit.

D. If so, the part of the judgment of the court below which convicted Defendant 2 as to the violation of the Specific Economic Crimes Act (Embezzlement) due to the sole criminal conduct against Defendant 2 and the part on acquittal of the reason No. 18 of the attached Table of the judgment below shall be reversed for the above reasons. However, this part of the judgment below is reversed for the above reasons. This part of the facts charged is related to a comprehensive crime with the charges No. 17 of the attached Table of the judgment below, and the court below sentenced Defendant 2 as to each of the facts charged against Defendant 2 on the ground that the above facts charged constitute concurrent crimes against Defendant 2, the violation of the Specific Economic Crimes Act (Embezzlement), the Specific Crimes Aggravated Punishment of Tax Crimes Act, and the Punishment of Tax Evaders Act (Embezzlement) and the facts charged against Defendant 2.

4. Conclusion

Therefore, without further proceeding to decide on Defendant 2’s grounds of appeal on the part of the judgment below’s sentencing, the part on Defendant 2 among the judgment below is reversed, and this part of the case is remanded to the court below for further proceedings consistent with this Opinion. Defendant 1’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Park Jung-hwa (Presiding Justice)