Defendant

Both parties

Pools (prosecutions) and cabins (public trial)

Law Firm private, Attorney Kim Gyeong-soo

Suwon District Court Decision 201 Gohap202 decided May 11, 2012

The judgment of the court below is reversed.

A defendant shall be punished by imprisonment for five years.

1. Summary of grounds for appeal;

A. Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust)

The defendant's act of allowing the non-indicted 3, the representative director of the non-indicted 2 corporation (hereinafter "non-indicted 2 corporation") to issue a promissory note in the name of the non-indicted 2 corporation, in the form of the victim non-indicted 2 corporation (hereinafter "non-indicted 2 corporation"), is valid against the victim company once it is an act within the scope of the right of representation. The victim's non-indicted 5 can take measures such as provisional attachment and seizure against the property of the victim company by using the above promissory note without delay, and thus the risk of property damage to the victim company is caused to the victim company. In the case of filing a lawsuit for payment of a promissory note, the victim company bears the burden of proof that non-indicted 5 knew that the said promissory note was issued due to the abuse of the right of representation by the non-indicted 3 corporation. In the case where the non-indicted 5 transferred the above promissory note to the third party, the victim company cannot exercise a malicious defense against the abuse of the right of representation by the defendant. Thus, the above act of breach of trust occurs.

B. Unreasonable sentencing (Defendant and Prosecutor)

As to the punishment (five years of imprisonment) sentenced by the court below, the defendant asserts that it is too unreasonable for the defendant, and the prosecutor asserts that it is too uneasible.

2. Judgment on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

A. Summary of the facts charged

The Defendant, along with Nonindicted 4, acquired 620,00 shares of Nonindicted Company 2 issued by Nonindicted 6 from Nonindicted 6 (35% of shares) on the ground that Nonindicted 3 was the representative director in form, and received 6.2 million shares of Nonindicted Company 2, from May 19, 2010 to August 2010, the Defendant was a major shareholder of Nonindicted 2, who actually operated Nonindicted Company 2, and did not use the funds of the Defendant for personal purposes, and had a duty to perform the business for the benefit of the Company.

Nevertheless, around May 25, 2010, the Defendant, along with Nonindicted 4, issued, at the office of Nonindicted 7 law firm in Jung-gu, Seoul (hereinafter omitted), a notarial deed stating that “When delayed the payment of a promissory note to the holder of the said promissory note, the Defendant would not raise any objection even if he/she is immediately subject to compulsory execution, to Nonindicted 5, a representative director of Nonindicted 1, who is the representative director of Nonindicted 2, as if he/she was agreed to do so at the time of borrowing from Nonindicted 1 Co. 3 (hereinafter “Nonindicted Co. 1”), KRW 5 billion necessary for the use of Nonindicted Co. 3 as the acquisition fund of Nonindicted Co. 2, Ltd. from Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”).

Accordingly, the Defendant, in collusion with Nonindicted 4 and 3, violated the duties to be dealt with for the benefit of the company, thereby having the said Nonindicted Company 1 gain pecuniary advantage equivalent to KRW 5 billion, and had the victim Nonindicted Company 2 suffer loss equivalent to the same amount.

B. The judgment of the court below

The court below acknowledged the facts as stated in its reasoning, and found that the representative director of the company abused his authority for the purpose of pursuing his own interest or a third party's interest regardless of the profit of the company, and even if the representative director abused his authority, the act is valid as an act of the company, but if the other party to the act knew or could have known the representative director's intention, it becomes null and void against the company (see Supreme Court Decision 2011Do8110, Sept. 29, 201). In light of the above legal principles, examining the above facts in light of the above legal principles, the defendant and the non-indicted 3 issued a promissory note to the non-indicted 5 and made an authentic deed to the non-indicted 2 as to the defendant's personal obligation for the purchase price of the company, which is the real major shareholder of the non-indicted 2 company, and the non-indicted 1, the non-indicted 2 company's representative director, was not aware of the above truth of the defendant and the non-indicted 3 company's above risk. Thus, the defendant and the non-indicted 2 were not guilty.

C. Judgment of the court below

In the case of breach of trust, property damage not only includes a real damage but also a case where the risk of actual damage to property has been caused, and the judgment of whether or not property damage has been made shall be understood from an economic point of view without legal judgment in relation to the property status of the principal. Even if the act of breach of trust is null and void by legal judgment, if the act of breach of trust has inflicted a real damage on the principal or has caused a risk of actual damage to property, it constitutes a crime of breach of trust (see, e.g., Supreme Court Decision 2009Do7783, Oct. 29, 2009). As long as the risk of loss has been caused, it does not affect the establishment of the crime of breach of trust even if it has been recovered or possible to recover after the occurrence of damage (see Supreme Court Decision 94Do3297, Feb. 17, 1995).

According to the evidence duly adopted and examined by the court below, the defendant, in collusion with the non-indicted 4 and 3 on May 25, 2010, issued one promissory note with the amount of five billion won borrowed from the non-indicted 1 to be used for the defendant's acquisition fund of the non-indicted 2, and one of the non-indicted 3's representative directors of the issuer non-indicted 2, on May 11, 2010, and issued one promissory note with the non-indicted 3, and delivered to the non-indicted 5, the non-indicted 5, who is the representative director of the non-indicted 1, the non-indicted 3, and the non-indicted 5, who issued and received the said promissory note upon the request of the defendant, the non-indicted 3, and the non-indicted 4 to issue and deliver it by requesting the above additional security.

Examining the above facts in light of the legal principles as seen earlier, insofar as the Defendant, etc. issued and delivered a promissory note in the name of the victim company, it would impose the obligation on the victim company at the time of its issuance, and there is a risk of property loss. Even if the said promissory note was issued due to abuse of the right of representation by the Defendant, etc., and is null and void, the victim company may incur damage to the third party, who is unaware of the fact by the recipient non-indicted 1 company, due to his personal defense cutting (Articles 17 and 77 (1) of the Bills of Exchange and Promissory Notes Act). Even if the liability on the part of the victim company is denied due to the circumstance that the third party, who was endorsed and transferred by the non-indicted 1, was aware of the fact, it is nothing more than the change in the situation after the crime was established, and therefore, the non-indicted 1 company is likely to secure the obligation on the part of the third party by means of endorsement and transfer of the above promissory note, etc., and thus, it cannot be deemed that the above financial damage to the victim company constitutes property damage.

Therefore, the judgment of the court below which acquitted this part of the facts charged is erroneous in the misapprehension of legal principles, and the prosecutor's above assertion is justified.

3. Conclusion

Therefore, since the prosecutor's argument about the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes is well-grounded, the above part should be reversed. The remaining part of the defendant's crime should be sentenced to a single punishment in relation to concurrent crimes under the former part of Article 37 of the Criminal Act.

Therefore, the judgment of the court below is reversed under Article 364(6) of the Criminal Procedure Act without examining the defendant and the prosecutor's assertion of unfair sentencing, and the judgment is again rendered as follows.

The summary of the facts of the crime and evidence recognized by this court is as follows: (a) in addition to the title "1. Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust)" (hereinafter referred to as "Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement)" (hereinafter referred to as "Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement of 2.), the title "1, 2, and 3" (hereinafter referred to as "Article 1.(c)" (hereinafter referred to as "Article 1. 8), and the summary of the evidence is as stated in each corresponding column of the judgment of the court below except for adding "No. 1. No. notarial deed (Evidence No. 8), prosecutor's statement against Non-Indicted 5

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

(a) The point of occupational embezzlement: Article 3(1)1 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Article 356, Article 355(1), and Article 30 of the Criminal Act [Generally, choice of limited imprisonment: Provided, That the maximum of imprisonment shall be 15 years by applying the main sentence of Article 42 of the former Criminal Act (amended by Act No. 10259, Apr. 15, 201; hereinafter the same shall apply];

(b) The point of occupational breach of trust: Article 3 (1) 1 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Article 356, Article 355 (2), and Article 30 of the Criminal Act / [Selection of Imprisonment with prison labor]

2. Aggravation of concurrent crimes;

Article 37 (former part of Article 37, Article 38 (1) 2, and Article 50 of the Criminal Act / [Aggravation of concurrent crimes with punishment prescribed in the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) with heavier Crimes]

The crime of this case is a crime where the defendant acquired the company of this case as corporate bonds and embezzled the funds and treasury stocks of the non-indicted 2, thereby repaying part of the above corporate bonds and acquired personal benefits. The defendant committed the crime of this case by setting up a secret plan and operating it in the hinterland, and the amount of embezzlement and breach of trust is very heavy. The crime of this case is the main cause of the crime of this case, and the non-indicted 2, the company of the non-indicted 2, which is the KOSDAQ-listed company, is ultimately delisting. The second loss is anticipated, and the damage suffered by the non-indicted 2, and the crime of this case does not recover. The crime of this case is likely to undermine sound economic order by impairing the trust in the entire listing company and the stock trading market. It is not easy to say that the crime of this case is a crime of this case.

However, considering the circumstances favorable to the defendant, such as the fact that the amount of profit acquired by the defendant through the crime of this case is not many, that the defendant is against himself and is divided, that there is only the fact that the defendant has been sentenced once a fine prior to the crime, that there is no substantial damage on the part of the defendant in breach of trust due to the issuance of a promissory note, and that there is no substantial damage on the part of the defendant, the punishment as ordered shall be determined by taking into account the circumstances favorable to the defendant, such as the defendant's age, character and conduct

Judges Yoon Sung-won (Presiding Judge)