Defendant

Prosecutor

Kim Jong-mun

Law Firm Barun, Attorney Go Young-sik

Seoul Southern District Court Decision 2011Gohap93 Decided September 16, 2011

The judgment of the court below is reversed.

The defendant shall be innocent.

1. Summary of the facts charged

The Defendant, as a substantial manager of Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”), conspired with Nonindicted Co. 2 on June 23, 200, promoted the issuance of USD 10 million with Nonindicted Co. 3’s securities at the office of Nonindicted Co. 1 located in Gangnam-gu Seoul ( Address omitted) on the purpose of raising funds for investment in new business facilities and operation of Nonindicted Co. 1’s new business facilities. Of this, USD 8 million was unlikely to be sold to overseas investors, and the Defendant pretended to purchase convertible bonds from Nonindicted Co. 4 and Nonindicted Co. 5, etc. on the basis that it would have been deposited into the deposit account of Nonindicted Co. 1, 200. At that time, Nonindicted Co. 1, 200, at the office of Nonindicted Co. 1, located in Gangnam-gu (hereinafter “Nonindicted Co. 1, 2000, supra, the Defendant realized the amount of KRW 8 million from Nonindicted Co. 4’s new business facilities to return it to Nonindicted Co. 1, and did not actually possess convertible bonds.

2. The judgment of the court below

The court below found that the defendant raised USD 4 million from the non-indicted 4 and non-indicted 5 on June 6, 200 and immediately paid USD 4 million from the deposited acquisition price. However, as to whether the defendant raised USD 4 million from the bonds company above the above USD 4 million and immediately returned it to the bonds company, and issued the bonds that have not been actually sold by promptly returning it, the court below acquitted the non-indicted 2 of the charges on the ground that there is no other evidence to acknowledge it, and found the defendant not guilty of the portion of USD 4 million in the charges of this case on the ground that there is no other evidence to acknowledge it, and sentenced the non-indicted 2 of the charges of this case on the ground that the statute of limitations has expired.

3. Summary of grounds for appeal;

The above fact-finding by the court below is in conflict with the facts found in the final judgment against Non-Indicted 2, who is an accomplice, and even according to the facts acknowledged by the court below, 4 million US dollars convertible bonds which Non-Indicted 3 acquired by the non-Indicted 3, which were offered as collateral and re-purchaseed with the loan received by the defendant at the beginning as collateral at the time of re-purchase, so this part of convertible bonds also constitutes a breach of trust since the sale of convertible bonds cannot be deemed to have been actually made. Nonetheless, the issuance of this part of convertible bonds also constitutes a breach of trust. Nevertheless, the court below acquitted the non-Indicted 3 of the facts charged on the ground that the non-Indicted 4 million US dollars convertible bonds acquired by the non-Indicted 3 and re-purchaseed with the non-indicted 3's securities did not have been sold, and acquitted the remaining 4 million US dollars convertible bonds on the ground that the statute of limitations has expired

4. Judgment of the court below

(a) Facts of recognition;

According to the evidence duly admitted and examined by the court below, the following facts are recognized:

(1) On June 200, the Defendant, a real operator of Nonindicted Company 1, decided to issue an overseas convertible bonds of USD 10 million, using Nonindicted Company 3’s securities ○○○○○○○○ Branch as a main agent. Of USD 10 million, the portion of USD 4 million out of the convertible bonds of USD 10 million, which was accepted as a borrowed money from the bond business operator, was immediately withdrawn from the subscription amount and repaid the borrowed money. The amount of USD 4 million was accepted by Nonindicted Company 3, a main agent, but the amount of USD 4 million was accepted by Nonindicted Company 1 as a security, and the issuance of convertible bonds was promoted under a plan to receive the loan and raise the re-purchase funds.

(2) The Defendant borrowed USD 4.6 million from Nonindicted 4 and Nonindicted 5 to pay the subscription price for convertible bonds to Nonindicted 3’s securities. On June 23, 2000, Nonindicted 3 deposited USD 9.66 million after deducting fees and attorney’s fees from USD 10.6 million, which was deposited as the subscription price for convertible bonds, into the foreign currency ordinary deposit account of Nonindicted 1’s Peace Bank. The Defendant deposited USD 4.66 million on the same day into the foreign currency general deposit account of Nonindicted 1’s Peace Bank. The Defendant deposited USD 4.66 million in the amount of KRW 5.97 million in the amount of KRW 5.7 million in the first bank account of Nonindicted 1, but paid the borrowed debt by remitting it to Nonindicted 4 and Nonindicted 5.

(3) Meanwhile, on June 26, 2000, the Defendant deposited USD 5,5772,000,000 in the remaining acquisition price into the Japanese bank account of Nonindicted Company 1, which was deposited, but withdrawn KRW 5,000,000,000,000,000 to Hyundai Mutual Savings and Finance Company, and KRW 3,000,000,000 to Hyundai Mutual Savings and Finance Company; and KRW 6,000,000 in the name of Nonindicted Company 6 (hereinafter “Nonindicted Company 6”) and Nonindicted Company 7 (hereinafter “Nonindicted Company 7”), which was actually operated by the Defendant as security, purchased the convertible bonds of USD 4,440,00 in the Nonindicted Company’s securities on June 27, 200.

(4) On August 4, 200, the Defendant terminated a deposit of KRW 5 billion, which was deposited with the above safe as a loan security, and repaid all of the loans owed in the name of Nonindicted Company 6 and Nonindicted Company 7.

(5) On August 4, 200, the Defendant sold USD 4 million to Nonindicted 8 and Nonindicted 9 for KRW 3.5 billion. From October 4, 200 to January 22, 2001, the remainder of USD 4 million was converted into shares and sold or sold in the form of convertible bonds. At that time, KRW 2.7 billion was deposited into Nonindicted Company 1. another KRW 2.7 billion on behalf of Nonindicted Company 11. The original and interest was provided to Nonindicted Company 1, but the Defendant was responsible for the damages, and invested that amount was not recovered (Evidence 104, 106, 353, 362, 241, 2536, 2541, 2536, 2541, 2541, 3745, 2541, 2547, 3756, 2545, 251, 2541, 3751, 2514).

B. Determination

However, the judgment of the court below is not acceptable for the following reasons.

(1) The court below rejected some of the charges on the ground that it was not recognized that the Defendant issued non-sale convertible bonds by pretending to purchase the convertible bonds by raising USD 8 million from non-indicted 4, etc., without considering whether the Defendant had actually sold the convertible bonds which were returned from Non-indicted 3’s re-purchase from Non-indicted 3’s securities, and by pretending to purchase the convertible bonds. However, despite the expression in the above charges, the core premise in the above charges was not actually sold the overseas convertible bonds amounting to USD 8 million. Thus, the court below did not have determined that the Defendant did not actually sold the convertible bonds amounting to USD 4 million which were re-purchased from Non-indicted 4, etc., but it did not err in its judgment.

(2) Furthermore, according to the above facts, since 4 million US dollars convertible bonds, which the defendant acquired from bond companies with the borrowed money and secured as the acquisition price, immediately repays the borrowed money with the acquisition price, was not actually paid out or the redemption obligation of convertible bonds was extinguished, there is a occupational duty to retire them even if the convertible bonds are issued, and 4 million US dollars convertible bonds re-purchases from non-indicted 3's securities with the acquisition price as security is not paid in accordance with the original plan, and the loans used as re-purchasing funds with the acquisition price as security are repaid, in light of the fact that the defendant actually did not acquire convertible bonds, or that the redemption obligation of convertible bonds is extinguished, there is a occupational duty to retire them even if they should not be issued or have to be converted to non-indicted 1's overseas convertible bonds, and thus, it does not constitute 1's occupational duty to retire or retire the bonds without actually selling them to the non-indicted 1's stocks, notwithstanding the difference in the process of raising the new bonds.

(3) However, in the instant case where the Defendant asserts that all of the convertible bonds secured as collateral for Nonindicted Company 1 and the funds acquired from the sale of the converted stocks were used as operating funds of Nonindicted Company 1, as seen earlier, whether the Defendant had a criminal intent in breach of trust, as seen earlier, KRW 2.7 billion was deposited into Nonindicted Company 1 from among the funds acquired by the Defendant through the sale of convertible bonds or the converted stocks, and as long as the Defendant, on behalf of Nonindicted Company 1, transferred both the principal and profits to Nonindicted Company 1 and invested in the acquisition of the shares of Nonindicted Company 10 billion won, it is difficult to readily conclude that the Defendant had a criminal intent in breach of trust with respect to the above five billion won portion, and there is insufficient evidence to acknowledge this, and there is no other evidence to acknowledge this otherwise.

(4) As seen earlier, the part of KRW 4.13 billion, excluding the part of KRW 5.4 billion, which is difficult to readily conclude that the prosecutor has a criminal intent to commit a crime of breach of trust (i.e., KRW 9.530 million - KRW 5.4 billion) is deemed to fall under Article 3(1)2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, and its statutory punishment is three or more years, and the statute of limitations is seven years pursuant to Article 249(1)3 of the former Criminal Procedure Act (amended by Act No. 8730 of Dec. 21, 2007). Meanwhile, as acknowledged by the evidence duly adopted and investigated by the court below, the defendant left on Sept. 18, 2001, which became final and conclusive on Oct. 12, 2002; and the statute of limitations period was suspended on Oct. 21, 201.

However, the instant public prosecution is a case where the statute of limitations has expired since January 22, 2001, since the completion of the sale or conversion of the total amount of US$8 million convertible bonds, it is clear that the statute of limitations expired since January 22, 2001, when seven years, which was the statute of limitations period, and the foregoing period, which was the period for which the statute of limitations has been suspended.

(5) Therefore, the judgment of the court below that acquitted the portion of USD 4 million among the facts charged in this case on the grounds of the judgment of not guilty and acquitted the remainder of USD 4 million ($ 4.53 billion) is erroneous in the misunderstanding of facts or misapprehension of legal principles, and there is no evidence of conviction as to the part of the crime in this case, and where the statute of limitations as to the remaining part has expired, the part of the charge shall be indicated in the order of innocence favorable to the defendant, and the part of the acquittal shall be sufficient only in the reasons of the judgment (see Supreme Court Decision 77Do1320, Jul. 12, 197), and it is unlawful that the court below indicated the acquittal in the order of acquittal without indicating it in the order of innocence in this case where the statute of limitations has expired.

5. Conclusion

Therefore, since the prosecutor's appeal has a reasonable ground, the judgment of the court below is reversed pursuant to Article 364 (6) of the Criminal Procedure Act, and the judgment is to be rendered again after oral pleadings. Of the facts charged in this case, 5.4 billion won among the facts charged in this case which are one of the crimes is identical to the above 1.1.2.3, and thus, the defendant should be acquitted pursuant to the latter part of Article 325 of the Criminal Procedure Act, since there is no proof of criminal facts as stated in the above 4.2.3,00 won, and the remaining 4.13 billion won should be sentenced to acquittal pursuant to Article 326 subparagraph 3 of the Criminal Procedure Act, since the public prosecutor's appeal falls under the case where the statute of limitations has expired as mentioned in the above 4.2.4.4.

Judges Choi Jin (Presiding Judge) Kim mutual name and Kim Tae-hun