[1] The meaning of "using documents" under Article 188-4 (4) 2 of the former Securities and Exchange Act prohibiting unfair trade practices using false or fraudulent display documents

[2] Whether there should be causation between "using false and non-performing indication documents" and "misunderstanding of another person" as elements for establishing a crime of violation of Article 188-4 (4) 2 of the former Securities and Exchange Act (negative)

[3] The standard for determining whether there was an inevitable circumstance in which wages, etc. could not be paid within the due date, which is an exemption from the crime of violating the duty to pay wages and retirement allowances under the Labor Standards Act

[1] Article 188-4 (4) 2 (see current Article 178 (1) 2 of the Financial Investment Services and Capital Markets Act), Article 207-2 (1) 2 and (2) (see current Article 443 (1) 8 and (2) of the Financial Investment Services and Capital Markets Act) of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635, Aug. 3, 2007) / [2] Article 188-4 (4) 2 (see current Article 178 (1) 2 of the Financial Investment Services and Capital Markets Act, Article 207-2 (1) 2 (see current Article 43 (1) 8 and (2) of the Financial Investment Services and Capital Markets Act, Article 443 (1) 8 of the Financial Investment Services and Capital Markets Act, Article 4635 of the Financial Investment Services and Capital Markets Act, Article 2 of the former Securities and Capital Markets Act) / [2]

[1] Supreme Court Decision 2009Do1374 Decided July 9, 2009 (Gong2009Ha, 1374) / [2] Supreme Court Decision 2003Do6759 Decided April 14, 2006 (Gong2006Sang, 831) / [3] Supreme Court Decision 2005Do9230 Decided February 9, 2006 (Gong2006Sang, 458) Supreme Court Decision 201Do10539 Decided November 10, 2011

Defendant

Defendant

Attorney Jeong-young et al.

Seoul High Court Decision 2014No211, 779 decided July 17, 2014

The appeal is dismissed.

The grounds of appeal are examined.

1. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement)

If the representative director of a corporation withdraws and uses the company's funds, and fails to present evidentiary materials as to the place of use, and fails to provide reasonable explanation as to the grounds for withdrawal and the place of use of the funds, this part may be presumed to have withdrawn the company's funds with the intent of unlawful acquisition and used them for personal purposes (see Supreme Court Decision 2003Do2807, Aug. 22, 2003, etc.).

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court was justifiable to have determined that the Defendant was guilty of all of the violation (Embezzlement) of the former Act on the Aggravated Punishment, etc. of Specific Economic Crimes (amended by Act No. 11304, Feb. 10, 2012) listed in the attached Table 1-1, 2-1, and 3-1 of the judgment of the first instance among the facts charged in the instant case on the grounds stated in its reasoning. In so doing, it did not err by failing to exhaust all necessary deliberations as alleged in the grounds of appeal by misapprehending the legal doctrine on the burden of proof, the intent of embezzlement, the intent of unlawful acquisition, etc.

2. As to the violation of the Act on External Audit of Stock Companies due to the preparation and disclosure of false or false financial statements

The lower court found the Defendant guilty of violating the former Act on External Audit of Stock Companies (amended by Act No. 9408, Feb. 3, 2009) and the former Act on External Audit of Stock Companies (amended by Act No. 12148, Dec. 30, 2013) on the grounds that Nonindicted Co. 1 (hereinafter referred to as “Nonindicted Co. 1”) did not obtain sales and net profit, such as the details of sales and net profit, from which the exhaust gas reduction device was actually sold to Nonindicted Co. 3 Co., Ltd. through Nonindicted Co. 2 Co. 3, Japan, via the Nonindicted Co. 2.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, such determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, the lower court erred by misapprehending the legal doctrine on criminal intent in preparing and disclosing false or fraudulent financial statements, or by misapprehending the bounds of the principle of free evaluation of evidence.

3. As to the violation of the Securities and Exchange Act

The act of actively utilizing a document in a specific situation is included in "using documents" under Article 188-4 (4) 2 of the former Securities and Exchange Act (amended by Act No. 8635 of Aug. 3, 2007 and enforced February 4, 2009; hereinafter referred to as the "former Securities and Exchange Act") by being aware that the document may cause misunderstandings as to matters that may affect investors' investment judgment, not merely because the document is made public in the electronic disclosure system of the Financial Supervisory Service with false or inadequate financial statements, which are necessary to significantly affect the property and management of the relevant corporation, or to protect investors, which may affect investors' investment judgment, but also include the act of actively utilizing the document in order to make the document as an opportunity to obtain money or other financial benefits, despite being aware that it could have an influence on investors' investment judgment (see, e.g., Supreme Court Decision 2009Do1374, Jul. 9, 2009).

Meanwhile, the language and text of Article 188-4 (4) 2 of the former Securities and Exchange Act, once once they used false or non-performing documents concerning material facts such as “to obtain money or other benefits from property by inducing misunderstanding of other persons,” the crime of violation of the above provision is established. The actual act of using documents does not require “to cause misunderstanding of other persons” or “to obtain money or other benefits from property.” Therefore, whether there exists causation between the use of false or non-performing documents and the misunderstanding of other persons does not affect the establishment of the above crime (see, e.g., Supreme Court Decision 2003Do6759, Apr. 14, 2006).

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and the evidence duly admitted, the lower court was justifiable to have found the Defendant guilty of violating the former Securities and Exchange Act among the facts charged in the instant case on the grounds stated in its reasoning. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding “using documents” and “the causal relationship between the use of false indication documents and others” or “profit from the violation” or “profit from the violation of the said Act, or by failing to exhaust all necessary deliberations, thereby violating logical and empirical rules and by exceeding the bounds of the principle of free evaluation of evidence.

4. As to the violation of the Financial Investment Services and Capital Markets Act

A. Violation of prohibition on the use of material nonpublic information

The lower court found the Defendant guilty of the violation of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013) due to the use of material nonpublic information among the facts charged in the instant case on the grounds that the Defendant could be found to have used the material nonpublic information known as the representative director of Non-Indicted Party 1 in the transaction of Non-Indicted Party 1’s stocks owned or offered as security, in full view of the timing, circumstances, and quantity of disposal of the stocks

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors of misapprehending the rules of logic and experience and free evaluation of evidence.

B. Violation of duty to report

Article 16 of the Criminal Act provides that an act of misunderstanding that one's act does not constitute a crime under Acts and subordinate statutes shall not be punishable only when there is a justifiable reason to believe that the misunderstanding does not constitute a crime. It does not mean a simple site of law, but it means that an act of misunderstanding is generally a crime, but it is recognized that it does not constitute a crime under Acts and subordinate statutes in his own special circumstances, and there is a justifiable reason to mislead misunderstanding (see Supreme Court Decision 2000Do3051, Sept. 29, 200, etc.).

In this case, the defendant did not know that the change in the ownership of shares should be reported within five days, etc., and the grounds of appeal are insufficient to deem that the defendant's act is not a crime permitted by the law, and it is not a case where the defendant's act constitutes a mere legal site. Thus, there is no problem in the establishment of crime. The argument in the grounds of appeal that the defendant's act does not constitute a crime under Article 16 of the Criminal Act is not acceptable.

(c) Fraudulent fraudulent transactions;

The lower court found the Defendant guilty on the ground that the legal doctrine on Article 188-4 (4) 2 of the former Securities and Exchange Act is likewise applicable to the interpretation of Article 178 (1) 2 of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013) and thus, the causal relationship between the use of false and fraudulent indication documents and the misunderstanding of other parties, and the occurrence of damages to other parties does not affect the establishment of the crime of violating the aforementioned Act among the facts charged in the instant case.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court’s determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding “the use of false indication documents and causation between the misunderstanding of other parties,” “interest arising from the violation,” “the benefit arising from the violation,” or “the burden of proof,”

5. As to the fabrication and uttering of official document, alteration and uttering of official document

The co-principal under Article 30 of the Criminal Act is established by satisfying the subjective and objective requirements, such as the implementation of a crime through functional control by the intent of co-processing and the functional control by the intent of co-processing. As such, a person who did not directly share and implement the elements of a crime among the competitors may be held liable for the so-called crime as a co-principal depending on whether the requirements are met (see Supreme Court Decision 2010Do3544, Jul. 15, 2010, etc.).

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and the evidence duly admitted, the lower court was justifiable to have found the Defendant guilty of all of the facts charged in the instant case’s forgery and use of official document, alteration of official document, and exercise. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by violating the logical and empirical rules and by misapprehending the bounds of

6. As to the violation of the Labor Standards Act

(a) Wages and annual leave allowances;

In full view of the circumstances stated in its reasoning, the lower court found the Defendant guilty of violating the Labor Standards Act due to the failure to pay wages and annual leave allowances among the facts charged in the instant case.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors of misapprehending the rules of logic and experience and free evaluation of evidence.

(b) Retirement pay;

The crime of violating the obligation to pay wages and retirement allowances as stipulated in Articles 109 and 36 of the Labor Standards Act is exempted only when the employer has made the best efforts to pay them in light of social norms, but the inevitable circumstances that were not able to pay them within the due date due to financial difficulties, etc. due to financial standing, etc., and the employer cannot be exempted from liability merely on the ground that the employer was unable to pay them with pressure due to financial difficulties, etc. In addition, in determining whether there are inevitable circumstances that make it impossible for the employer to pay them within the due date, the employer may make the best efforts to pay them as much as possible for early settlement of wages and retirement allowances in order to promote the stability of the livelihood of retired workers, etc., or suggest the future repayment plan clearly, and consult with the employee in good faith, and whether the measures that can be objectively assessed as being acceptable in the position of the retired workers, etc. are also one detailed statement (see, e.g., Supreme Court Decision 2011Do10539, Nov. 10, 2011).

Examining the reasoning of the judgment below in light of the aforementioned legal principles and the evidence duly admitted by the court below, it is just to find the court below guilty of violating the Labor Standards Act due to unpaid retirement allowances among the facts charged in the instant case, and there is no error of law by misapprehending the legal principles on the grounds of exemption from the violation of the Labor Standards Act

7. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (issuance of False Tax Invoice)

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court is justifiable to have found the Defendant guilty of violating the aforementioned Act among the facts charged in the instant case, and contrary to what is alleged in the grounds of appeal, there were no errors of misapprehending the rules of logic and experience and free evaluation of evidence.

8. As to the violation of the Act on External Audit of Stock Companies due to the obstruction of business by fraudulent means and the obstruction of external audit

The lower court determined that the Defendant was guilty of violating the former Act on External Audit of Stock Companies (amended by Act No. 9408, Feb. 3, 2009); the former Act on External Audit of Stock Companies (amended by Act No. 12148, Dec. 30, 2013) due to obstruction of business through fraudulent means and interference with external audit, on the ground that it is reasonable to deem that the Defendant, in making a processed sales by means of forging export and import documents and manipulating accounting books and presenting financial statements reflecting such sales to the auditor, was likely to interfere with external audit business of the auditor; and that there was a risk of interference with external audit business, regardless of whether the auditor was aware of the fact that the processed sales was included in the financial statements of the instant case; and that there was a substantive concurrent relation between the exercise of forged public documents and the exercise of the certificate of completion of export and import declaration.

Examining the reasoning of the lower judgment in light of the relevant legal principles and the evidence duly admitted by the lower court, such determination is justifiable, and contrary to the allegations in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the requirements for establishment of crime of interference

9. Regarding the issue of unfair sentencing

According to Article 383 subparagraph 4 of the Criminal Procedure Act, only in cases where death penalty, life imprisonment, or imprisonment or imprisonment without prison labor for not less than ten years has been imposed, an appeal on the grounds of unfair sentencing is allowed. Thus, in this case where a minor sentence has been imposed on the defendant, the argument that the amount of punishment is unreasonable is not legitimate

10. Conclusion

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)