[1] The meaning of "when a loss was incurred", which is an element for establishing a crime of breach of trust

[2] The case affirming the judgment below holding that the crime of occupational breach of trust is established on the ground that the crime of occupational breach of trust was committed even if a set-off is null and void by law, in case where the defendant, who is the actual manager of Gap corporation, concluded a false sales contract that he sold trees to Gap corporation, and set-off the sales price claim and the claim against Gap corporation against Gap corporation

[3] The case holding that the court below erred in the misapprehension of legal principles in holding that the crime of occupational breach of trust is established, in case where the defendant, who is the actual manager of Gap corporation, was prosecuted with the charge of causing property damage to Gap corporation by completing the registration of creation of a neighboring mortgage in the future of Eul corporation's real estate to secure his personal debt, although it cannot be deemed that property damage was incurred to Gap corporation or that the risk of property damage was not caused

[1] In the case of breach of trust, the term "when the act of breach of trust causes property damage" includes not only a real damage but also a case where the risk of actual damage to property has been caused, and the existence or absence of property damage should be understood from an economic point of view without legal judgment in relation to the property condition of the principal. Therefore, even if the act of breach of trust is null and void by legal judgment, if the act of breach of trust causes real damage to the principal or causes risk of actual damage to the property from an economic point of view, it constitutes a crime of breach of trust.

[2] In a case where the Defendant, who is the actual manager of the Company A, concluded a false sales contract that he sold a golf course trees to Company A, and set off the sales price claim and the claim against Company A against the Defendant, the case affirming the judgment below that the crime of occupational breach of trust is established on the ground that even if the set-off is null and void by law because the Defendant’s claim for a golf course sales was not in existence, the occurrence of

[3] In a case where the Defendant, a de facto manager of the Company A, was prosecuted for causing property damage to Company A by completing the registration of creation of a new mortgage on the real estate owned by Company B in order to secure his/her personal debt, the case holding that the lower court erred by misapprehending the legal principles on the ground that the crime of occupational breach of trust was established, even though the Defendant’s act of creation of a new collateral was committed, since the Defendant was well aware of the fact that the establishment of a new collateral was done to secure his/her personal debt, and thus, the act of creation of a new collateral is null and void as an abuse of his/her right of representation, and there is no room for the Defendant to bear not only an obligation based on the invalid collateral security against Company B, but also an obligation to compensate for damage arising from the employer’

[1] Articles 355(2) and 356 of the Criminal Act / [2] Articles 355(2) and 356 of the Criminal Act; Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes / [3] Articles 355(2) and 356 of the Criminal Act; Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

[1] Supreme Court Decision 2003Do4890 decided September 29, 2005 (Gong2005Ha, 1739)

Defendant 1 and one other

Defendants

Law Firm Man-woo et al.

Seoul High Court Decision 2011No1386 decided November 4, 2011

Of the judgment below against Defendant 1, the part of the judgment of the court below against the non-indicted 1 corporation is reversed, except for the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) for the non-indicted 1 corporation, the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) for the non-indicted 2 savings bank on April 30, 2004 and July 15, 2005, and the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) for each of the non-indicted 2

We examine the grounds of appeal.

1. As to the ground of appeal by Defendant 1 (hereinafter “Defendant”)

A. The point of embezzlement of KRW 1.5 billion for Nonindicted Co. 3 (hereinafter “Nonindicted Co. 3”)’s funds as KRW 1.5 billion

Based on the circumstances stated in its reasoning, the lower court recognized that the advance payment of KRW 1.5 billion between Nonindicted Co. 3 and Defendant’s Co. 5 operated by Nonindicted Co. 4, based on the following circumstances: (a) the Defendant, the actual manager of Nonindicted Co. 3, committed accounting in the form of paying advance KRW 1.5 billion to Nonindicted Co. 5; and (b) embezzled Nonindicted Co. 3’s funds by using the said money to pay Nonindicted Co. 3’s share acquisition price to Nonindicted Co. 6.

Examining the reasoning of the judgment below in comparison with the records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there is no violation of law of free evaluation of evidence against logical and empirical rules.

B. The point of Nonindicted Co. 3’s funds 7 billion won occupational embezzlement

The intent of unlawful acquisition in embezzlement refers to an intention to dispose of another person's property in violation of his/her duty for the purpose of pursuing his/her own interest or a third party's own interest, and even if there is an intention to return, compensate or preserve it later, it does not interfere with recognizing the intention of unlawful acquisition (see, e.g., Supreme Court Decision 2004Do5167, Nov. 10, 2006). In addition, if a representative director of a company or a person who has been in charge of the de facto affairs related to the custody or management of company's funds in accordance therewith withdraws and uses large company funds for purposes other than provisional payment, etc., and if no legal procedure such as a resolution of the board of directors, etc. goes beyond the generally acceptable scope and arbitrarily lends and disposes of company funds for private purposes by using the status of the representative director, etc. (see, e.g., Supreme Court Decision 2003Do1355, Apr. 27, 2006).

According to the reasoning of the judgment below, based on the circumstances in its reasoning, the court below determined that the actual acquirer of Nonindicted Co. 3’s shares was the defendant, and then the defendant treated KRW 7 billion of the funds of Nonindicted Co. 3 in the form of lending the funds of Nonindicted Co. 3 to the defendant or his wife Nonindicted Co. 7, and used the funds of Nonindicted Co. 3 for the payment of the acquisition price of the shares of Nonindicted Co. 3, as if the defendant was the money of

In light of the above legal principles and records, the judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the intention of unlawful acquisition in the occupational embezzlement.

C. The point of Nonindicted Co. 8 (hereinafter “Nonindicted Co. 8”)’s occupational embezzlement of KRW 5.734 billion in capital 5.7 billion

The lower court, based on its stated reasoning, acknowledged that the amount of KRW 7.1 billion for Nonindicted Co. 7’s loans to Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2 Bank”) was used for the personal purpose, such as purchase of land or payment of the Defendant’s subscription price for new shares, or for the affiliate of ○○ Group, including Nonindicted Co. 3, etc., and it cannot be deemed that it was used for Nonindicted Co. 8, and subsequently, determined that the Defendant, the actual manager of Nonindicted Co. 8, used Nonindicted Co. 8’s funds to repay the above loans in the name of Nonindicted Co. 7 constitutes occupational embezzlement.

In light of the above legal principles and records, the above determination by the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the intention of unlawful acquisition in the crime of occupational embezzlement.

D. The point of occupational breach of trust against Nonindicted Company 8

In the case of breach of trust, property damage includes not only a case where a real damage is inflicted but also a case where a risk of actual damage to property has been caused, and the judgment on the existence of property damage is not based on the legal judgment in relation to the property condition of the principal. Therefore, even if the act of breach of trust is null and void by a legal judgment, if the act of breach of trust is judged from an economic point of view and causes a real damage to the principal or a risk of actual damage to property, it constitutes a crime of breach of trust (see, e.g., Supreme Court Decision 2003Do4890, Sept. 29, 2005).

According to the reasoning of the lower judgment, the lower court found the Defendant guilty of this part of the charges on this part, on the ground that, based on the relevant employment evidence, the Defendant concluded a false sales contract that △△△△ Industry sold an amount equivalent to KRW 3 billion in the market value of trees used for landscaping at a golf course to Nonindicted Company 8 and accounted as offset of KRW 3 billion out of the above trees sales claims and the short-term claims against Nonindicted Company 8 against the Defendant, thereby acquiring pecuniary benefits and causing property damage to Nonindicted Company 8 by being exempted from the obligation to Nonindicted Company 8, and even if the above offset is legally null and void due to the Defendant’s absence of the claim for the purchase of trees, the lower court found that

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to damages in the crime of occupational breach of trust, as alleged in the grounds of appeal.

E. The point of embezzlement of Nonindicted Company 8’s capital amounting to KRW 877,6720,000

On the grounds indicated in its reasoning, the lower court found the Defendant guilty of this part of the charges by deeming that the Defendant used KRW 8777,672 million of the funds of Nonindicted Company 8 for personal purposes, such as the Defendant’s payment of subscription price to Nonindicted Company 3’s shares. Examining the reasoning of the lower judgment in comparison with the records, the lower court’s judgment is just and acceptable, and contrary to what is alleged in the grounds of appeal, there is no violation

F. The point of business embezzlement of Nonindicted Co. 9 (hereinafter “Nonindicted Co. 9”)

According to the reasoning of the judgment below, the court below acknowledged the following facts: (a) the defendant ordered the representative director of the non-indicted 9 company in his actual operation to borrow KRW 3 billion from the non-indicted 2 bank in the name of the non-indicted 9, and let the non-indicted 8 company and the non-indicted 3 company, the affiliate of the ○○ Group, remitted the above amount of KRW 2.488 billion to the non-indicted 8 company and the non-indicted 3 company; and (b) the defendant handled the above amount as if he deposited the above amount into the non-indicted 8 company and the non-indicted 3 company, thereby offsetting the existing claim for provisional payment against the representative of the company; and (c) such circumstance does not interfere with the recognition of the intention of unlawful acquisition solely on the basis that the defendant was made out a loan agreement between the non-indicted 9 company and the non-indicted 8

In light of the above legal principles and records, the judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the intention of unlawful acquisition in the crime of occupational embezzlement.

G. The point of business embezzlement of Nonindicted Co. 11 (hereinafter “Nonindicted Co. 11”)

Even if a person is not recognized as a custodian of another's property, if the criminal act of embezzlement is committed in collusion with the person in a custodian's position, such person may be punished as an accomplice in embezzlement pursuant to the main sentence of Article 33 of the Criminal Act (see, e.g., Supreme Court Decision 2003Do4909, Nov. 14, 2003).

According to the reasoning of the judgment below, the court below acknowledged the fact that the defendant offered a proposal to Nonindicted Company 11, the subcontractor of Nonindicted Company 8, and received a loan of KRW 10 billion from Nonindicted Company 11 in the name of Nonindicted Company 11, and then used KRW 5,945,212,038 from Nonindicted Company 12 for a purpose unrelated to the business of Nonindicted Company 11, such as operating funds of Nonindicted Company 8, etc., and determined that the defendant constitutes a co-principal of the crime of occupational embezzlement, in collusion with Nonindicted Company 12, because the defendant used the funds of Nonindicted Company 11 for a purpose unrelated to the business of Nonindicted Company 11, such as funds for operation of Nonindicted Company 8.

In light of the above legal principles and records, the judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there are no errors in the misapprehension of legal principles as to co-principals in occupational embezzlement.

H. The point of business embezzlement of Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”)

The parties who bear rights and duties in financial transactions are in principle determined on the basis of their names. Thus, even where a borrower borrows a loan from a third party, the validity of the loan shall not be denied by deeming the transaction between a financial institution and a lender as a false declaration of agreement, barring special circumstances, such as where the financial institution vests the borrower in the actual legal effect of the loan, and the nominal lender agrees not to impose a burden on the loan, etc., on the lender, barring special circumstances such as active proof that the borrower has agreed not to impose a burden on the loan, etc. (see, e.g., Supreme Court Decision 2010Do3

According to the evidence of employment of the court below, the defendant, who is the person in charge of non-indicted 2 bank loans, received loans from the defendant 2, who was in charge of non-indicted 2 bank loans, at one place among the affiliates of ○○ Group, and sent them to the non-indicted 2 bank, and consented to the request from the defendant 2 to the effect that the above affiliate loans will be settled at the place where the loan was received from the non-indicted 1 company. The defendant received 3.5 billion won loans from the non-indicted 2 bank in the name of the non-indicted 1 company, and then remitted them to the account of the non-indicted 13, etc., and accordingly, he was repaid 3.5 billion won of the existing loan obligations from the non-indicted 13, etc. However, in light of the above legal principles, it is difficult to view that the defendant 2 or non-indicted 2 did not have any legal effect on the above loan to the non-indicted 1 company, and thus, the defendant was not liable for the debtor.

In the same purport, the court below is just in holding that the actual borrower of the above loan cannot be deemed to be the defendant 2, and thus allowing the defendant to use the above loan, which is the funds of the non-indicted 1 company, voluntarily in repayment of another person without going through normal procedures, constitutes occupational embezzlement. Contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending the legal principles on the intention of illegal acquisition in the determination of the debtor of the loan

I. The point of occupational breach of trust in relation to the provision of real estate to Nonindicted Co. 3

(1) Even if the act of breach of trust is null and void by legal judgment, where the act of breach of trust is judged from an economic point of view and thereby causing a real loss to the principal or a risk of actual damage to property, it shall be deemed that the act of breach of trust was committed, but where the risk of such damage is not caused, it shall not be deemed that the crime of breach of trust is committed (see, e.g., Supreme Court Decisions 2010Do6490, Sept. 30, 201; 201Do3643, Feb. 10, 2011).

(2) On April 27, 2009, the court below found the Defendant guilty of part of the charges on this part of the facts charged, on the ground that, in relation to this part of the facts charged, the creation of the above right to collateral security was invalid against Nonindicted Co. 3, although there is room to regard the above right to collateral security as invalid against Nonindicted Co. 3, if the Defendant had completed the registration of creation of collateral security at the time of the strike, which was owned by Nonindicted Co. 3 on April 27, 2009, in order to secure his own personal debt, he acquired pecuniary benefits from Nonindicted Co. 14 and incurred damage to Nonindicted Co. 3 by completing the registration of establishment of collateral security in an amount equivalent to the maximum debt amount of KRW 6 billion in the 1

However, it is difficult to accept the judgment of the court below for the following reasons. Even in accordance with the judgment of the court below, the defendant was well aware of the circumstances that the defendant created the above right to collateral security in order to secure his personal obligation (the record reveals that the non-indicted 14 prepared a false contract stating that the facilities of the non-indicted 3 were leased to and entrusted with the operation of the facilities of the non-indicted 5,525,000,000 won, and the above right to return the deposit was established as the secured claim). Since the above act of creating the right to collateral security becomes null and void as an abuse of the right to representation, the non-indicted 3 has no room for bearing not only the obligation based on the above right to collateral security against the non-indicted 14, but also the liability of the user or the liability for damages arising from the corporation's tort. According to the evidence employed by the court below, the above right to collateral security was cancelled on May 3, 2011 (no evidence exists to recognize that the above non-indicted 3's property contribution was accompanied).

Nevertheless, the lower court found the Defendant guilty of this part of the facts charged is erroneous by misapprehending the legal doctrine on damages in the crime of occupational breach of trust, thereby adversely affecting the conclusion of the judgment. The ground of appeal on this point

2. As to the Defendants’ grounds of appeal

(a) Receipt and provision of loans of KRW 200 million;

The lower court determined that Defendant 1’s assertion that the above KRW 200 million was rejected, and that the above KRW 200 million was received from the Defendants, based on the following circumstances as indicated in its reasoning: (a) at the time when Defendant 1 received a loan of KRW 10 billion from Nonindicted 2 Bank in the name of Nonindicted 4, Defendant 2 was in a position to exercise overall control over the credit collection business as a director treatment for Nonindicted 2 Bank’s business; and (b) Defendant 1 transferred KRW 200 million on September 20, 2006, which was the following day after the fourth loan was granted in the name of Nonindicted 4 in the name of Nonindicted 4, to Defendant 2; and (c) during that process, Defendant 2 was unable to reveal the fact of remittance by

Examining the reasoning of the judgment below in comparison with the records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there is no violation of law of free evaluation of evidence against logical and empirical rules.

B. Violation of trust in relation to Nonindicted 2’s loan in the name of Nonindicted 4

If an employee of a financial institution provides loans without taking reasonable and reasonable measures, such as being provided with sufficient security to ensure the recovery of loan claims, and without taking any reasonable measures, it cannot be deemed that there was no perception that the employee would have a third party gain property benefits and incur damages to the financial institution. Meanwhile, in order to recognize a beneficiary who gains profit from the implementation of an occupational breach of trust or a third party closely related thereto as a joint principal offender with an executor of an occupational breach of trust, it is insufficient to have a third party gain profit by taking advantage of the act of breach of trust, even though he/she knows that the act of an executor constitutes an act of breach of trust against the victim himself/herself, and it is necessary to actively participate in the act of breach of trust by inducing an executor of an occupational breach of trust or participating in the entire process of the act of breach of trust (see, e.g., Supreme Court Decision 2007Do1033, Apr. 12, 207).

According to the reasoning of the judgment below, the court below determined that Defendant 2, who took overall charge of the loan-raising business of Nonindicted Bank 2, in light of the current status at the time of loan or the contents of related statutes, ordered to prepare an examination division to allow loan to its subordinate employees without any objective appraisal of the above land value; Defendant 1 also actively distorted the security value of the land in Pyeongtaek-dong and offered money and valuables to Defendant 2 in relation to the loan to Defendant 2 on May 11, 2006, taking into account the following circumstances: (a) Defendant 2, who took full charge of the loan-raising business of the Jongno-gu Seoul Special Metropolitan City (number 2 omitted) cemetery 9,467 square meters, which was offered as security for this part; and (b) Defendant 2, who took full charge of the loan-raising business of Nonindicted Bank 2, who took full charge of the loan-raising business of Nonindicted Bank 2, without securing sufficient collateral; and (c) Defendant 2, who actively participated in Defendant 2’s act of breach of trust; and (d) Defendant 1) Defendant 2.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to occupational breach of trust or joint principal.

3. Scope of reversal

Therefore, the part of the judgment of the court below regarding the defendant 1's occupational breach of trust related to the provision of real estate to the non-indicted 3's non-indicted 3 should be reversed, and the part which the court below found the defendant guilty against the above defendant shall also be reversed as it was sentenced to one punishment at the court below in relation to concurrent crimes under the former part of Article 37 of the Criminal Act. Since the part which the court below found the defendant guilty as the defendant guilty should be reversed in relation to a single crime or a single comprehensive crime as above with the reversed part, the judgment of the court below against the above defendant is against the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) against the non-indicted 1, and each violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) against the non-indicted 2 bank on April 30, 2004 and July 15, 2005 and the remainder other than the

4. Conclusion

Therefore, among the judgment of the court below against Defendant 1, the part of the judgment of the court below against the non-indicted 1 is reversed, and this part of the case is remanded to the court below for further proceedings consistent with the assent of all Justices who reviewed the appeal by Defendant 2. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)