2017Gohap1009 Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement)

1. A;

2. B

Freeboard, Kim Jae-at (Public Trial)

Law Firm C, Attorney D (Defendant A)

Attorney E (for the defendant A)

Law Firm F, Attorneys G, and H (Defendant B)

For purposes of

January 19, 2018

Defendants are not guilty.

Each summary of the judgment against the Defendants shall be published.

1. Summary of the facts charged

Defendant A is the representative director of the Victim Co., Ltd. (hereinafter referred to as "the victim Co., Ltd.") from October 26, 2007 to October 6, 2008, who has been engaged in the management of the fund and overall management of the victimized Co., Ltd.

On August 1, 2008, Defendant B entered into a contract for acquisition of shares and management rights to acquire 2 million shares of a victimized company, which he owns, from Defendant A in the early August 2008 (hereinafter “instant contract”). On August 11, 2008, Defendant B borrowed 700 million won from the J of a bondholder and entered into a contract for acquisition of shares and management rights to acquire 2 million shares of a victimized company and 16.5 billion won from Defendant A (hereinafter “instant contract”).

Accordingly, on August 12, 2008, the date of the contract, Defendant B paid KRW 700 million to Defendant A, among the down payment of KRW 7.8 billion on or around August 13, 2008, and on August 13, 2008, KRW 2.6 billion out of the down payment, Defendant A succeeded to the obligation of KRW 2.6 billion to the obligation of KRW 2.6 billion to Defendant C, and paid KRW 4.5 billion out of the down payment to Defendant A. Furthermore, Defendant B agreed to pay each of the remainder KRW 1.7 billion to Defendant A, up to August 19, 2008, and the remainder KRW 7 billion by not later than three days prior to the temporary general meeting of shareholders of the victimized company.

Meanwhile, in taking over Defendant B’s obligation of KRW 2.6 billion to Defendant B on August 2008, in order to prevent the acquisition of Defendant B’s obligation of KRW 2.6 billion, the Defendants used money from the bond company L to provide K as additional collateral in order to prevent a trade of KRW 2,00,000 of the shares owned by Defendant A, which are kept as collateral. In addition, the Defendants intented to withdraw the subscription price for new shares and to use it to pay Defendant B’s personal debt to Defendant B by offering a third party’s small-value public offering.

Accordingly, Defendant B lent KRW 1 billion from L to K as additional collateral on August 13, 2008, and delivered KRW 600 million to K, Defendant B acquired KRW 2.6 billion of the stock security loan to “B and joint and several surety”, and granted KRW 400 million as collateral in order to compensate for losses incurred by the Plaintiff’s participation in capital increase with consideration on the same day.

Defendant A offered a small-sum public offering of capital increase to the victimized Company on the same day and then used KRW 1 billion out of the paid-in capital increase to the victimized Company as the repayment of Defendant B’s liabilities to the victimized Company’s employees, which was notified to Defendant B from around August 14, 2008, while Defendant A kept in the business for the victimized Company of KRW 1,99,05,000,000 as the next day. Accordingly, the Defendants conspired to make up for the occupational embezzlement of KRW 1 billion of the paid-in capital to the victimized Company by Defendant B.

2. Judgment on Defendant A

A. Summary of the defendant's and defense counsel's assertion

On August 14, 2008, the Defendant had the victimized Company remitted KRW 1 billion to the N’s account at the request of B on August 14, 2008. However, although B intended to keep and manage KRW 1 billion, the Defendant was aware that B withdrawn KRW 1 billion from the deposit account of the victimized Company anticipated to be seized and stored and managed separately, and that B was not aware of the fact that B used KRW 1 billion for the purpose of personal debt repayment against L. In other words, the Defendant was unaware of the crime of embezzlement and B.

B. Relevant legal principles

1) In order to constitute a joint principal offender, it is necessary to commit a crime through a functional control by a joint doctor, which is a subjective element, with the intention of joint processing and objective requirements. The intent of joint processing should be one of the two to commit a specific criminal act with the intent of joint intent, and shall be to move one’s own intent to commit another’s act by using another’s act (see, e.g., Supreme Court Decision 2001Do4792, Nov. 9, 2001).

2) Meanwhile, the finding of guilt ought to be based on evidence with probative value, which leads a judge to have the conviction that the facts charged are true beyond a reasonable doubt. Therefore, if there is no such evidence, even if there is a doubt as to the Defendant’s guilt, the determination of conviction ought to be based on the benefit of the Defendant (see, e.g., Supreme Court Decision 2010Do14731, Dec. 23, 2010).

1) Whether the Plaintiff is aware of the obligation against L

A) From April 2008, when the Defendant was investigated by the prosecution due to the suspicion of embezzlement of funds in the course of operation of the victimized Company Co., Ltd., Ltd., which was a major shareholder and a director as the representative director, the Defendant: (a) transferred the shares and management rights to each of the above companies to a third party; and (b) sought response to the investigation by compensating for the amount of embezzlement damages as part of the transfer proceeds; (c) on July 8, 2008, the Defendant entered into a contract with P Co., Ltd. (hereinafter referred to as “P”) to transfer the shares and management rights of the victimized Company’s shares at KRW 2,00,000 and 1.6,000,000,0000,000 won for acquiring the shares and management rights of the victimized Company; and (d) failed to pay the contract deposit, etc. on August 12, 2008, the Defendant concluded the instant contract with the P Co., Ltd. (hereinafter referred to as “P”).

B) In light of the aforementioned developments leading up to the conclusion of the instant contract and the process of the contract process, etc., the Defendant appears to have taken into account the financial power of the person who would acquire the shares and the right of management of the victimized company. Such Defendant may be deemed to have not concluded the instant contract with B, if he knew that B borrowed KRW 1 billion from L, a third party, and had no financial capacity to repay the amount to the victimized company’s funds, in order to perform the obligation stipulated in the instant contract.

C) B stated in this court that “When entering into the instant contract, there was a statement to the effect that “the Defendant would have called “the Defendant would have taken over the acquisition price.” However, L was around September 2008, which was the end of the temporary general meeting of shareholders. B lending KRW 1 billion to B at the time of receiving the payment, and it was not known the Defendant’s existence at the time of receiving the payment or demanding the payment of KRW 1 billion.” L’s wife, who was appointed as a management manager of the victimized company and delivered KRW 1 billion borrowed from L directly from L, was acting as the Defendant. At the time of this court, the Defendant did not know of the existence of L’s transfer of KRW 1 billion to B at the time of borrowing KRW 1 billion. In light of the purport that Q’s statement to the effect that it was difficult to readily conclude that Q’s account was 1 billion in the name of the Defendant’s lender or that it was 1 billion in the above account.”

2) The recognition, etc. of the Defendant as to the use of KRW 1 billion remitted to N account in the name of the N.

A) The Defendant asserts that, between B and B, the amount of KRW 2 billion regarding the issue of capital increase for new shares as stipulated in the instant contract is KRW 1 billion; among them, the amount of KRW 1 billion is to be used for the repayment of operating expenses or urgent debt of the victimized company; and the remaining KRW 1 billion is to be used for the settlement of claims against the victimized company upon the completion of the acquisition of the management right by B while holding in custody by B. Furthermore, the Defendant initially asserted that the victimized company’s name may be subject to seizure due to suspicion of embezzlement of the victimized company and the subsidiaries’ funds, and thus, the said KRW 1 billion was to be kept as a check not in the name of the victimized company, but in the name of the victimized company. At the time when B requested transfer from the N account, the Defendant wired the amount of KRW 1 billion to the N account with the knowledge that it was in custody from

B) B stated in this court that “The amount of KRW 1 billion out of KRW 2 billion paid-in capital with the Defendant was to be used for the repayment of the Defendant’s obligation to the victimized Company. The Defendant’s remaining 1 billion capital paid-in capital to the victimized Company, and thus, the Defendant’s 1 billion capital out of the paid-in capital for capital increase is to be kept until the general meeting of shareholders, which completely goes beyond the management right. When the accounting office of the victimized Company completed and the acquisition is completed, the settlement of accounts would be defective.” At the time, the Defendant stated to the effect that “the account in the name of the victimized Company was able to be seized at any time, and the Defendant was to withdraw and keep the KRW 1 billion as a check.” The statement made under B conforms to the Defendant’s change.

C) Furthermore, as to the reasons why the Defendant remitted KRW 1 billion from the account in the name of the victimized company to the N account, B made a statement to the effect that “B was unable to issue a check after the lapse of the banking business hours,” and that “B demanded L to pay the debt amount of KRW 1 billion in the name of the Defendant,” and that “B requested L to transfer the money to the N account in the name of the Defendant.” The above statement to the effect that “B was made to pay the money in the name of the Defendant prior to the time of the bank on August 14, 2008, i.e., the L’s statement in this court, “B sent the money in the name of the bank,” and “B sent the money in the name of the Defendant as soon as 3-4 hours prior to the date of the bank account.” B, “The time is late until the date”, thereby making the statement to the effect that B’s account number changed.”

3) Statements, etc. of relevant persons

A) At the time of the prosecutor’s investigation, L made a statement to the effect that at the time of the prosecutor’s investigation, the Defendant transferred the funds of KRW 1 billion to the N account in collusion with B as personal debt repayment for himself. However, L made a statement to the effect that “I do not know whether or not the Defendant and B have conspired with the Defendant” in this court, “I do not know whether or not the Defendant and B have conspired to do so. I do not need to refer to the question of the investigative agency, so I do not like to do so.” B) Q made a statement to the effect that “I know that the Defendant borrowed KRW 1 billion from L, but, upon being investigated by the prosecutor, I would have known that the Defendant borrowed KRW 1 billion from L to the N account on August 14, 2008, and repaid it.” However, Q made a statement to the effect that “The Defendant was the representative director of the victimized Company at the time of approval of the execution of the funds as a representative director of the victimized Company.”

(iv)vers

In light of the background and content of the instant contract, whether the Defendant was the victim company’s money transaction between B and L, the circumstance that the victim company’s capital increase payment was kept and managed in B, and the Defendant’s awareness about the use of the victimized company’s capital increase amount of KRW 1 billion in consideration of the degree of perception as to the use of the victimized company’s capital increase, etc., it is insufficient to recognize the fact that the Defendant instructed the victim company to make such remittance in the position of representative director at the time when the victimized company’s capital increase payment was transferred to N account in the name of N, solely because the Defendant instructed the victim company to make such remittance in the position of representative director of the victimized company, and it is difficult to recognize

3. Judgment as to Defendant B

A. Judgment on the facts charged that the defendant embezzled in collusion with A

The prosecutor appears to have prosecuted the Defendant as a co-principal of the crime of embezzlement on the premise that the Defendant, who is not in the position of custodian with respect to KRW 1 billion of the funds of the victimized Company, participated in the embezzlement crime of A in the position of custodian. However, under the structure of the facts charged, even if the Defendant arbitrarily used the funds of the victimized Company for personal debt repayment, as seen earlier, insofar as it is difficult to determine the Defendant guilty of the embezzlement act of A because it is difficult for the Defendant, who is not in the position of custodian, to recognize that the damaged Company A used the funds of the victimized Company as the principal principal agent of embezzlement, as it is difficult to find the Defendant guilty of the crime of this case, in collusion with A to participate in embezzlement, it is difficult to determine the guilty of this part of the facts charged (On the other hand, in this case, whether the Defendant committed the crime of this case in the form of indirect principal offender by using A without the awareness of the crime of embezzlement or the intent of unlawful acquisition, can not be said to have committed the crime of this case in the form of indirect principal offender.

B. Determination as to whether the defendant can be recognized as a custodian

1) The prosecutor prosecuted the Defendants as a co-principal for the crime of embezzlement. There is no room to regard the Defendant as a co-principal for the crime of embezzlement on the premise that the Defendant was in the custody of 1 billion won of the funds of the victimized company in relation to the victimized company.

2) As to this, the Defendant and his defense counsel asserted to the effect that, at the time of August 14, 2008, the Defendant was merely the contractor’s position under the instant contract that was paid to L out of the subscription price paid to the victimized company, the Defendant did not hold the said one billion won custodian in relation to the victimized company.

3) In the crime of embezzlement, “the custody of the thing” refers to a state of de facto or legal control over the property, and the custody of the thing should be based on the consignment relationship, as well as on the consignment relationship. However, it is not necessarily required to be established by a contract such as loan of use, lease, delegation, etc., and may also be established by administrative management, customs, cooking, and trust rules (see, e.g., Supreme Court Decision 2010Do17396, Mar. 24, 2011).

4) The following circumstances acknowledged by the records of this case: ① According to the contract of this case, upon the completion of the payment of down payment and intermediate payment, A was appointed as the manager of the victimized company, and upon the completion of the payment of any balance, the Defendant and the victimized company were to jointly manage the victimized company until the date of the general meeting of shareholders (see Article 6 of the contract of this case). The Defendant deposited KRW 7 billion remaining before three days of the temporary general meeting of shareholders of the victimized company A with financial institutions designated by A and paid the balance deposited at the temporary general meeting of shareholders as the registration officer (see Article 3(2)(b) of the contract of this case). ② The Defendant still paid KRW 7.8 billion to A at the time of the request of the victimized company to the effect that the Defendant would not have been in the name of the victimized company to whom the Defendant would have been in the name of the victimized company to whom the Defendant would have been in the name of 1 billion won was in the custody of the damaged company’s funds at the time of the above transfer of funds. However, the Defendant still did not have been appointed the Defendant’s manager.

4. Conclusion

Ultimately, since the facts charged against the Defendants constitute a case where there is no proof of each crime, a judgment of innocence is rendered pursuant to the latter part of Article 325 of the Criminal Procedure Act, and pursuant to the main sentence of Article 58

The summary of the judgment of innocence shall be publicly announced.

The presiding judge, judge and presiding judge;

Judges Man-ho

Judges Han Han-chul