[1] In a case where a financial institution actually delivers a new loan agreed to be repaid as principal and interest on the existing loan of a customer to the customer, whether the crime of occupational breach of trust is established (affirmative in principle)

[2] Where loans based on loan holders do not exceed the lending limit to the same person, but exceed the lending limit when the loans are based on the person to whom the loans actually accrue, whether such loans violate Article 12 of the Mutual Savings Banks Act (affirmative)

[3] Whether a violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Aggravated Punishment, etc. of Specific Economic Crimes) is established in a case where an executive officer or employee of a financial institution lends money exceeding the collateral value in collusion with the other party to the loan and receives part of the loan to return the agreed money and valuables, and receives the agreed money and valuables accordingly, in addition to the crime

[1] Articles 355(2) and 356 of the Criminal Act / [2] Article 12 of the Mutual Savings Banks Act, Article 39(4)6 of the Mutual Savings Banks Act (amended by Act No. 12100, Aug. 13, 2013) / [3] Articles 30, 355(2), and 356 of the Criminal Act, Article 5 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes,

[1] Supreme Court Decision 2009Do10730 Decided January 28, 2010, Supreme Court Decision 2003Do3516 Decided October 10, 2003 / [2] Supreme Court Decision 2003Do7018 Decided October 15, 2004, Supreme Court Decision 2009Do13879 Decided May 13, 2010 / [3] Supreme Court Decision 94Do346 Decided February 25, 1997 (Gong197Sang, 1017), Supreme Court Decision 2005Do7112 Decided October 12, 2007 (Gong2007Ha, 1796), Supreme Court Decision 3010Do3979 Decided May 27, 2010

Defendant 1 and two others

Defendants and Prosecutor

Attorneys Kim Yong-con et al.

Seoul High Court Decision 2012No4288 decided May 31, 2013

All appeals are dismissed.

The grounds of appeal are examined.

1. As to the Defendants’ grounds of appeal

A. As to the defendants' violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) or occupational breach of trust due to bad loans

Since the crime of occupational breach of trust is established when a person who administers another person's business obtains economic benefits or has a third party obtain such benefits from an act in violation of his/her duties and thereby causes damage to the principal, the crime of occupational breach of trust shall be established. Therefore, in order to establish the crime of occupational breach of trust, a financial institution shall have a property damage to the principal as a result of the act of occupational breach of trust. If a financial institution provides a new loan to the customer in the form of a document as if it provided a new loan to the customer in order to meet the principal and interest of the existing loan of the customer, and it is not a new loan to the customer, but a financial institution actually provides a new loan to the customer, it shall not be deemed a separate crime of occupational breach of trust. However, if a financial institution actually delivers a new loan to the customer, it shall not be arbitrarily disposed of, or for any other reason, the loan cannot be repaid to the principal and interest of the existing loan, barring special circumstances such as where a new loan is agreed to repay the principal and interest of the existing loan, it shall be deemed that the risk of damage has already occurred at the same time as the loan (see Supreme Court Decision 200030Do130.

In full view of the circumstances stated in its reasoning, the lower court determined that each of the above loans constitutes an offense of occupational breach of trust by the borrower in relation to each of the above loans, since each of the loans constitutes an insolvent loan that was made without securing the debt recovery liability, and Defendant 1 and 2, who are officers and employees of the non-indicted 1 Savings Bank (hereinafter “non-indicted 1 Bank”), was led or involved in the execution of each of the loans despite being aware of the non-performing loans. Each of the loans is not merely a simple arrangement of documents to repay the existing debts, but it can be deemed that the non-indicted 1 Bank newly delivered the loans to the borrower, thereby causing the risk of property damage to the non-indicted 1 Bank. As such, since each of the loans constitutes an offense of occupational breach of trust by the borrower in relation to each of the above loans, and Defendant 3 actively participated in this part of the loans by seeking the borrower’s name, security, and false appraisal and assessment at the request of the defendant 1, 2, and the non-indicted 1.

Examining the reasoning of the judgment below in light of the evidence duly admitted by the court below and the above legal principles, the above judgment of the court below is just, and contrary to the defendants' grounds of appeal, there were no errors by misapprehending the legal principles as to property damage or the establishment of joint principal offender in the crime of occupational breach of trust, or by exceeding the bounds

B. As to Defendant 1 and 2’s violation of the Act on Special Cases Concerning the Voluntary Use of Customer Deposit(Embezzlement) using the test room

The lower court found Defendant 1 guilty on the grounds stated in its reasoning, on the following grounds: (a) continuously conspired with Defendant 2, etc. during the period from February 22, 2012 to May 2, 2012, including the time when Defendant 1 ceased to work at Nonindicted Bank 1’s bank; (b) committed embezzlement of customer deposits using a practice program (the test) that does not include deposit payment; and (c) as long as Defendant 1 used the funds raised from the funds to pay overdue interest, a nominal borrower, security, false, or forged appraisal and assessment for the purpose of understanding the financial status of Nonindicted Bank 1’s bank, it constitutes unlawful use of the household assets of the remaining bank in order to realize the financial status of Nonindicted Bank 1’s bank; and (d) it cannot be deemed as an act for the interest of Nonindicted Bank 1’s bank, and thus, it is sufficiently recognized that Nonindicted Bank 1’s intent of unlawful acquisition is also recognized.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the said judgment is justifiable, and contrary to what is alleged in the grounds of appeal by the said Defendants, the lower court did not err by misapprehending the legal doctrine regarding the establishment of illegal acquisition intent or joint principal offender, or by exceeding the bounds of the principle of free evaluation of evidence by

C. As to Defendant 1’s remaining grounds of appeal

For reasons indicated in its holding, the lower court convicted Defendant 1 of the facts charged of violating the Act on Special Cases (private Financial Brokerage, etc.) on the ground that Defendant 1 did not work as an executive officer or employee of the bank, by using information on the status that was unknown, the said bank’s personal act of lending money and gain profits to the customers of the bank.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal by Defendant 1, it did not err by exceeding the bounds of the principle

D. As to Defendant 2’s remaining grounds of appeal

(1) Violation of the Mutual Savings Banks Act due to loans exceeding the limit on the same borrower

Even if each of the loan holders has a formal identity or has an independent legal personality, and a loan based on a loan holder does not exceed the lending limit to the same person, as long as the lending limit exceeds the lending limit to the same person when the loan is based on a person to whom it actually belongs, such lending goes against the regulations on the restriction on lending limit to the same person under Article 12 of the Mutual Savings Banks Act (see, e.g., Supreme Court Decisions 2003Do7018, Oct. 15, 2004; 2009Do13879, May 13, 2010).

The court below held that, on the premise that, where a person to whom a loan actually belongs obtains a loan from several persons, the person to whom the loan actually belongs shall be deemed to fall under an individual borrower's "individual borrower" as a loan to one actual borrower, and on the premise that the person to whom the loan actually belongs, who is not an individual borrower, shall be deemed to fall under an individual borrower's "individual borrower"; and on the premise that the person to whom the individual borrower and the person to whom the credit risk as prescribed by the Presidential Decree share shall be determined "individual borrower" as a whole, the natural persons indicated in the same part of the facts charged shall be deemed to fall under the relationship of "individual borrower" with the

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and the evidence duly admitted by the lower court, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding the same borrower, or by exceeding the bounds

(2) Transfer of ownership prior to the payment of the purchase price, violation of the Special Economic Act due to the voluntary termination of a security, or violation of occupational breach of trust

In full view of the circumstances stated in its holding, the lower court determined that Defendant 2’s act was an act in violation of the duties of an executive officer or employee of the financial institution, and that it was a risk of property damage or property damage to Nonindicted Bank 1, and further, Defendant 2’s act in violation of duties performed under the awareness that each borrower would gain pecuniary profit and under the recognition that each borrower would incur damage to Nonindicted Bank 1, as well as the act in violation of duties performed by Nonindicted Bank 2, as an act in violation of the duty of an executive officer or employee of the financial institution.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, such determination is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on intentional

2. As to the Prosecutor’s ground of appeal

A. As to the acquittal portion of Defendant 1

It is merely an internal distribution of profit among the co-principals of the crime of occupational breach of trust due to an improper loan, and it does not constitute a separate crime of violation of the special law with regard to the giving and receiving of money and other valuables. (See Supreme Court Decisions 94Do3346 delivered on February 25, 1997; 2005Do7112 delivered on October 12, 2007, etc.).

The court below acquitted the defendant 1 and the non-indicted 5 and the non-indicted 6 on the ground that since the non-indicted 5 offered the real estate owned by the non-indicted 1 bank as collateral, which has little value as collateral due to the establishment of senior mortgage, and applied for loans of KRW 1.65 million, and the non-indicted 6 shared the role of submitting a false appraisal report evaluated as the collateral value of the above real estate as KRW 3 billion, it was actively processed for the crime of violation of the special landscape law (Misappropriation) by Defendant 1, the defendant, non-indicted 5 and the non-indicted 6 are in a co-principal relationship with the crime of violation of the special landscape law (Misappropriation) due to loans of KRW 1.650 million, and since the defendant 1 received KRW 50 million from the non-indicted 5 and 6 from the non-indicted 5 and 6, the co-principal of the crime of occupational breach of trust due to the above non-indicted 5 and 6,000 won, it did not constitute a separate violation of the special landscape law.

Examining the reasoning of the judgment below in light of the aforementioned legal principles and records, the above determination by the court below is just and acceptable, and contrary to the prosecutor's grounds of appeal, there were no errors in the misapprehension of legal principles as to the establishment of a crime of violation of special law, or in exceeding the bounds of the principle of free evaluation of evidence by

B. As to Defendant 2

(1) The court below affirmed the judgment of the court below that found Defendant 2 guilty of this part of the facts charged on the ground that Defendant 2 conspired with non-indicted 7 Co. 7 Co. 9 (hereinafter "non-indicted 7")'s representative director of the non-indicted 7 Co. 9 and the non-indicted 10 Co., Ltd. (hereinafter "non-indicted 9 et al.") deposited the money transferred for repayment of the existing loans of the above company into the name of repayment of the principal and interest of the non-indicted 9 Co. 10 million won and obtained about KRW 550 million from non-indicted 9 et al. and suffered losses equivalent to the same amount of the victim non-indicted 1 Co. 1, the funds of the non-indicted 1 bank were not leaked outside due to the above acts such as the defendant 2 et al., but only difference between the balance of the loans of the non-indicted 7 Co. 9 and the non-indicted 9 et al., which caused losses or losses to the non-indicted 1.

Examining the reasoning of the judgment below in light of the records, the above judgment of the court below is just, and contrary to the prosecutor's grounds of appeal, there were no errors in the misapprehension of legal principles as to property damage.

(2) The prosecutor appealed against Defendant 2’s guilty portion of the judgment of the court below, but there is no indication in the petition of appeal as to the grounds of appeal nor any statement in the grounds of appeal as to the grounds of appeal.

3. Conclusion

Therefore, all appeals by the Defendants and the Prosecutor are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Min Il-young (Presiding Justice)