Defendant 1 and two others

Defendants and Prosecutor

The number of luminous minerals

Attorneys Lee Young-soo et al.

Seoul Central District Court Decision 2005Gohap860 Delivered on December 8, 2005

All appeals by the Defendants and the Prosecutor are dismissed.

1. Summary of grounds for appeal;

A. Defendants

The sentence against the Defendants is too heavy.

(b) Prosecutors;

(1) misunderstanding of facts or misapprehension of legal principles

The court below found Defendant 1 and 2 not guilty of the facts charged in violation of the Act on the Regulation and Punishment of Criminal Proceeds Concealment (hereinafter referred to as the "Criminal Proceeds Act"). However, since the above Defendants’ act of issuing the company funds deposited in the bank account under the name of Nonindicted Co. 1 (hereinafter referred to as Nonindicted Co. 1) or with intent to use them for their own or for a third party, and objectively realize the intent of acquisition at the time of withdrawal as if they were withdrawal of legitimate corporate funds, the crime of embezzlement has already been completed and the object of the crime has already been specified at that time, and the act of preparing and binding false slips, etc. for the purpose of disguised withdrawal as legitimate disbursement constitutes "an act of pretending the cause of criminal proceeds" under the Criminal Proceeds Act, and the act of issuing or depositing cash acquired by embezzlement constitutes "an act of changing it with a third party's cashier's checks or depositing it into the borrowed account with the intention to use it with the intent to use it for its own or with the intent to use it as a third party's withdrawal of corporate funds." However, the court below's act of preparing or using the borrowed account of embezzlement.

(2) Unreasonable sentencing

The sentence of the court below against Defendant 1 and 2 is too weak.

2. Determination:

A. Judgment on the prosecutor's misconception of facts or misapprehension of legal principles

(1) Summary of the facts charged

Of the facts charged against Defendant 1 and 2, the summary of the above violation of the Criminal Proceeds Act No. 1 and 2 is 700,000 won listed in the separate sheet No. 1-3 of the judgment of the court below, "No. 400,000 won listed in the separate sheet No. 50,000 won for the purpose of pretending the cause of the crime or pretending to be legitimately acquired," and the court below prepared an accounting document such as the false statement No. 4 in the separate sheet No. 1-700,000 won for the purpose of using the specific, tracking, or discovery of the above criminal proceeds by issuing cashier's checks to the bank account under the name of others, and then prepared a revised statement No. 407,00,000 won listed in the separate sheet No. 1-29,000 won for the crime proceeds of 700,000 won listed in the separate sheet No. 1-500,000 won for the purpose of issuing cashier's checks.

(2) Defendants’ assertion

Defendant 1 and Defendant 2: (a) the need for expenditure for Nonindicted Company 1’s business; (b) in order to raise funds to be disbursed for items for which normal accounting is impossible; (c) the preparation of accounting documents, such as false slips, and withdrawal of funds from the company account; and (d) deposit them into the borrowed account; and (c) there was no intention to make embezzlement using the funds for personal purposes from the beginning; and accordingly, there was no intention to conceal and disguise criminal proceeds.

(3) The judgment of the court below

The Criminal Proceeds Act was enacted to regulate the act of pretending or concealing criminal proceeds generated from specific crimes as legitimate revenues (money laundering, etc.). In light of the legislative intent and the concept of "criminal proceeds", which is the criminal proceeds under Article 2 subparagraph 2 (a) of the same Act, at least in the case of a serious crime under Article 3 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, the criminal proceeds can be deemed as criminal proceeds only when the object of the crime reaches a certain state, and it is reasonable to view that the crime proceeds cannot be deemed as criminal proceeds even if the object of the crime is not yet specified.

In light of the following circumstances acknowledged by the record, namely, Defendant 2’s withdrawal of Nonindicted Company 1’s funds through an alternative accounting method according to Defendant 1’s order, who is the representative director of Nonindicted Company 1, and raising funds in the borrowed account; Defendant 1, the representative director of Nonindicted Company 1, in lieu of the borrowed account passbook; Defendant 1’s instructions on the place of using the funds created by Defendant 1 (if the funds created were personally embezzled, the issues after the creation of the funds); and the considerable amount of funds deposited in the borrowed account and borrowed account deposited in the Nonindicted Company 1’s account is not known, and it is not included in the embezzlement amount. The evidence presented alone does not intend to separately manage the withdrawn funds with Nonindicted Company 1’s funds; as a result, it appears that Defendant 1 and 2’s act of depositing in the borrowed account was not an unlawful intent to obtain profits, but an unlawful intent to use the funds deposited in the borrowed account with the name of Nonindicted Company 1, and thus, it is not reasonable to conclude that the funds deposited in the borrowed account was not deposited in the borrowed account.

Therefore, inasmuch as Defendant 1 and 2’s withdrawal of funds from the Nonindicted Company 1’s account through an irregular accounting process and keeping the funds in the borrowed account at the same time, and then the proceeds from the crime were deemed to have reached the stage of occupational embezzlement only when the funds were used at will, as seen above, the crime proceeds from the crime was committed. As such, the act of preparing a false payment advance sheet prior to the occurrence of criminal proceeds by embezzlement and depositing them into the borrowed account or issuing cashier’s checks in a third party’s name cannot be deemed as an act of concealing and pretending “criminal proceeds.” In addition, the submitted evidence alone cannot be readily concluded that there was a criminal intent to conceal and disguise “criminal proceeds” at the time of making a false payment advance sheet and depositing them into the borrowed account or issuing them with a third party’s cashier’s checks, and there is no other evidence to acknowledge such criminal intent. Therefore, this part of the facts charged constitutes a case where there is no proof of criminal facts.

(4) The judgment of this Court

According to the court below and the evidence duly employed by this court, the act of raising funds by Defendant 1 and 2 by withdrawing the funds of Nonindicted Company 1 and depositing them into the borrowed account managed by Defendant 1 and 2 itself is difficult to view that the above Defendants realized the intent of unlawful acquisition of the non-indicted 1’s non-indicted 1’s non-indicted 1’s funds. The court below’s findings of fact and its determination are just and consistent with the purpose of the prosecutor’s indictment.

In addition, "criminal proceeds" under the Criminal Proceeds Act refers to "property generated by a criminal act or property acquired as remuneration for such criminal act" (Article 2 subparagraph 2 (a) of the same Act. In this case, in this case, the above defendants' "property generated by arbitrarily withdrawing corporate funds under custody in a borrowed account and holding them by themselves, or property acquired as remuneration for withdrawal and disbursement of such funds" shall be deemed to be "criminal proceeds". The "funds withdrawn from a company fund through a changed account or funds under management by depositing such funds in a borrowed account" of the non-indicted 1 company shall not be deemed to be "criminal proceeds" as prior to the establishment of a criminal act.

Ultimately, on the premise that the funds of the latter correspond to the "criminal proceeds" under the Criminal Proceeds Act, the prosecutor asserts the grounds for the indictment and appeal of this case on the ground that the above Defendants' act of preparing and keeping false slips, issuing cashier's checks, and making and issuing cashier's checks in the process of creating funds for management of the latter, and deposit and remittance in the third party's name constitutes "an act that disguises the facts concerning the cause of criminal proceeds" or "an act that conceals criminal proceeds for the purpose of pretending the assets legitimately acquired." However, such assertion cannot be accepted for the reasons as seen above, and it is contradictory to the purport of the prosecution concerning the occupational embezzlement of this case.

B. Determination on the assertion of unfair sentencing

(1) Determination on the assertion of unreasonable sentencing by Defendant 1 and the prosecutor

Defendant 1 paid all the amount embezzled individually by Defendant 1, and there are reasons to take into account the circumstances such as age and health condition. However, on the other hand, considering all the sentencing conditions specified in Article 51 of the Criminal Act as stated in the argument of the instant case, such as the fact that the amount embezzled is heavy in that the amount of such embezzlement is a large amount, and that the said Defendant is generally liable as the representative director of Nonindicted Company 1, the composition company, the composition company, etc., it is deemed that the punishment imposed by the lower court to Defendant 1 is appropriate, and thus, the argument of unreasonable sentencing is without merit.

(2) Determination on the assertion of unreasonable sentencing by Defendant 2 and the Prosecutor

Defendant 2 is the first offender, and there is a reason to take into account the circumstances of Defendant 2’s repayment of a total of KRW 2.4 billion out of the amount of damage, such as additional deposit of KRW 510,146,280 in the trial, etc. However, in the meantime, there is no reason for considering the fact that the victim company filed a separate criminal complaint with an intention to the amount of embezzlement of the individual, and the amount of punishment is desired, considering all the sentencing conditions stipulated in Article 51 of the Criminal Act as stated in the argument of this case, such as the fact that the composition procedure is in progress due to corporate insolvency, and that the defendant did not report to the supervising court, and that the court below arbitrarily executed it without reporting it to the supervising court. In light of the fact that the accounting director responsible for the whole business affairs of the above defendant is responsible for illegal accounting, fund management and execution, and that the amount of the management fund was arbitrarily disposed of. The above defendant's compensation of the above amount is very large in nature, and considering all the sentencing conditions of the Criminal Act as stated in the argument of this case.

(3) Determination on Defendant 3’s assertion of unreasonable sentencing

Defendant 3 paid in full the amount embezzled by Defendant 3 and did not have any particular criminal record, and there are other grounds for consideration in light of the circumstances. Meanwhile, the above Defendant’s assertion of unfair sentencing on Defendant 3’s grounds are without merit, since it is recognized that the punishment imposed by the lower court on Defendant 3 is appropriate, in consideration of all the sentencing conditions stipulated in Article 51 of the Criminal Act as stated in the argument of the instant case, inasmuch as Defendant 1 and 2 knew that Defendant 1 and 2, as the vice head of the accounting division, have been aware that the act of embezzlement of corporate funds would be committed by creating a secret fund, and thus, it cannot be deemed that the nature of the

3. Conclusion

Therefore, in accordance with Article 364(4) of the Criminal Procedure Act, all appeals filed by the Defendants and the prosecutor are dismissed. It is so decided as per Disposition.

Judges (Presiding Judge) No. 100