2014Gohap682 Violation of the Financial Investment Services and Capital Markets Act

2015 Gohap419 (Consolidated) Fraud

2016 initially 5269 Application for a compensation order

A

Kim Jong-seok, Lee Jong-hee (Court of Prosecution), Park Jong-dae (Court of Public Trial)

Law Firm (LLC) B

Attorney C, D

E

February 15, 2017

A defendant shall be punished by imprisonment for a term of one year and two months.

Of the facts charged in this case, it is not guilty.

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

An application for remedy by an applicant for remedy shall be dismissed.

Criminal History Office

【Criminal Power】

On October 21, 2010, the defendant was sentenced to two years of imprisonment with prison labor in Seoul High Court on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) and completed the execution of the above punishment on October 7, 201.

【Criminal Facts】

On October 201, 201, the Defendant and F are trying to acquire management rights and shares of H Co., Ltd. (hereinafter referred to as "Co., Ltd." from the time when the second referring to the Co., Ltd.), which is the COS listed company, to take part of the Stockholm options that will be received after completion of the acquisition, if the acquisition cost of KRW 70 million to KRW 80 million,000,000,000,000,000,000,000,000,000).

However, in fact, G was not the subject of acquiring H shares and management rights, but the quantity and value of the shares to be received by Stockholm options have not been determined, and the amount and value of the shares to be received by the Defendant and FG were also not determined, and even if the purchase price of the H shares was received from other persons, it was very unclear whether the said shares could be actually sold to them.

Nevertheless, the Defendant, along with F, conspiredd to acquire H stocks with F, as if they can sell the H stocks at a low price of KRW 800 per share, and to acquire money in the name of the purchase price of stocks.

1. F, on November 201, 201, at his office located on the fourth floor of the Gangnam-gu Seoul Metropolitan Government building, acquired the right of management and shares of the victim E by acquiring the H company. As accepted, F would sell the lower price of H shares by December 15, 201. At the present time, the amount of KRW 800,000 per share would be 10,000 per share, and first, the amount of KRW 80,000 per share would be 1,000 per share.

Around November 201, the Defendant and F, as seen above, deceiving the victim, and then deceiving the victim by taking 430,000 shares into account the account designated by the Defendant at the market price of KRW 130,000,000, which was possessed by the victim.

2. On November 25, 201, the Defendant and F, as seen above, deceiving the victim E, and deceiving the victim, through the said victim, remitted KRW 100 million to the Defendant’s national bank account in the name of a de facto marital relationship with the Defendant, and acquired KRW 100 million by deceiving K to return KRW 100 million to purchase the said shares in lieu of the said shares that the victim intended to purchase.

3. Around December 2, 2011, the Defendant and F deceptioned the victim M through the above E that “I hold substantial management rights and shares of H” and that “I will sell shares at a low price on the face of the investment funds.” The Victim N also deceivings the victim M in the same manner around that time.

Around December 2, 2012, the Defendant and F acquired 80 million won from the victim M to the national bank account in the name of the above L, and 54 million won from the victim N to the same account on December 26, 2011.

Summary of Evidence

1. Defendant's legal statement;

1. Each statement of 0 witnesses in the protocol of the sixth trial of 2015 Gohap419, witness E, M, 2015 Gohap419;

1. Each police statement of E, M, G, or L;

1. A certificate (number 2), details of remittance, details of stock transfer and stock transfer (number 3), receipts (number 10);

1. Previous records of judgment: Criminal records, etc., inquiry reports, and current status of personal identification and confinement;

Application of Statutes

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

Articles 347(1) and 30 of the Criminal Code

1. Aggravation for repeated crimes;

Article 35 of the Criminal Act

1. Aggravation for concurrent crimes;

The former part of Article 37, Article 38(1)2, and Article 50 of the Criminal Act (an aggravated punishment for concurrent crimes prescribed in fraud around November 201, against victims E with the largest penalty)

1. Article 32 (1) 3 of the Act on Special Cases concerning Expedition, etc. of Legal Proceedings of Application for Compensation;

Reasons for sentencing

1. The scope of punishment;

From one month to thirty years of imprisonment; or

2. Scope of recommendations;

[Determination of Punishment] General Fraud Group: Determination of the type on the basis of the sum of the amounts obtained by deceit according to the methods of dealing with the same kind of crime (not less than KRW 100 million, less than KRW 500 million, and the sum of the amounts obtained by deception)

【Special Convicted Person】

[Scope of Recommendation] One year to four years (Basic Area) imprisonment

3. Determination of sentence: One year and two months of imprisonment; and

The crime of this case was committed by the Defendant in collusion with F and acquired the total amount of KRW 364 million from the victims, and the nature of the crime is not good. The Defendant was sentenced to imprisonment due to a violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) and committed the crime of this case only once a month since the execution of the sentence was completed. The circumstances after the Defendant was released on bail, such as escape immediately before the judgment was rendered.

However, it is advantageous to the fact that the defendant fully acknowledges the crime and the victims express their intention not to punish.

In addition, the sentence shall be determined as ordered in consideration of all the sentencing factors shown in the pleadings of this case, such as the age, character and conduct of the defendant, and circumstances after the crime.

The acquittal portion

1. Summary of the facts charged

The Defendant, while taking over P in 11 billion won, did not know to the representative director with capital increase with capital increase of 15 billion won through the fictitious payment of 15 billion won. However, as the company's operating funds were insufficient due to the wind taken over without equity capital, the Defendant raised funds by advertising as if the P was a sound company, thereby raising funds by issuing and selling bonds with warrants.

On May 1, 2009, the Defendant: (a) purchased the balance of KRW 20-3 billion by entering into a contract for the acquisition of management rights with the Company T&T with the Company; and (b) purchased the bonds with private equity separation type 3 billion won issued by the Company, thereby seeking to recover the investment through capital increase with capital increase with capital increase within two months; (c) although the original financial situation was not good, the financial statements were good for success of KRW 15 billion with capital increase with capital increase on February 10, 2009; and (d) the current management situation is good for repayment of a large amount of debts. P will also take over the capital in the Company of the Company of Q. Accordingly, if so, it would go back to the P&T type 3 billion; and (d) would be natural and natural.”

However, on February 10, 2009, the Defendant, while accepting P, lent 15 billion won from bond holders to increase capital. After accounting as if the Defendant invested in five companies, the Defendant only dealt with the money deposited in the company, and paid 15 billion won to bond holders in full, and as such, P did not have any capital due to the capital increase. Therefore, it was impossible to accept P due to the lack of funds to take over the Kazatan mine within the company, and there was a possibility of delistinging P’s capital increase and the fact that P would have been found to be the largest payment.

On May 20, 2009, the Defendant deceiving S and caused S to purchase KRW 3 billion with privately placed separate-type bonds issued by P prior to May 20, 2009, and received advance KRW 1.76 billion with the exception of KRW 240 million and KRW 1 billion with the exception of KRW 1 billion with the deposit amount.

Accordingly, the Defendant obtained a profit equivalent to KRW 1.76 billion using a deceptive scheme for the purpose of trading bonds with warrants, which are financial investment instruments.

2. Relevant legal principles

Article 188-4(4)1 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) prohibits the act of spreading intentionally the false market price or false facts or other rumors or using a deceptive scheme in order to gain unjust benefits in connection with the sale and purchase or other transaction of securities. Here, the term "defensive scheme" refers to the means, plans, tricks, etc. for the purpose of inducing a certain act by deceiving the other party to the transaction or an unspecified investor, and the term "defensive network" refers to the act of deceiving another person by means of causing false facts different from objective facts (see, e.g., Supreme Court Decision 2009Do6411, Dec. 9, 2010). This legal doctrine applies to the interpretation of the "defensive scheme" under Article 178(2) of the Financial Investment Services and Capital Markets Act.

3. Circumstances suspected of being guilty;

A. A. Around February 10, 2009, P offered capital increase through a third party allotment method (number of KRW 19,94,94, amount 14,99,99,95,500). At the time, the Defendant borrowed 15 billion from the bond company to pay the capital increase under the name of the third party, and immediately paid the capital increase in the name of the third party, and then paid the capital increase in the capital increase in the capital increase in the capital increase in the capital increase in the capital increase in the capital increase in the amount of KRW 15 billion. The account accounts dealt with that P made advance payment to five companies, including

B. On May 2009, the Defendant entered into a false agreement to take over the right to extract from U-owned corporations to U to lend KRW 19.5 billion to U with the intent to have the accounting of KRW 15 billion of the most paid-in capital, and publicly announce a half-yearly report including the above false content.

C. The Defendant was sentenced to imprisonment with prison labor for two years due to the aforementioned disguised payment act and the fraudulent unfair trading act caused by the false public disclosure (Seoul High Court Decision 2010101, Oct. 21, 2010); and P was delistinged on February 9, 2010.

D. Around May 20, 2009, S accepted bonds with preemptive rights issued by P in the name of R and KNB P, and the investigative agency and this court stated that “The largest reason for acquiring bonds with preemptive rights is that P has succeeded to capital increase with the capital increase of 15 billion won. If P was aware of the fact that the price for capital increase with preemptive rights was the fictitious payment, it would have been apparent that de-listing would have been manifest, and thus, it would not have accepted the bonds.” (Evidence 2 & 230 of evidence Nos. 682, page 1, 2).

4. Whether the defendant has used a deceptive scheme for the purpose of selling and buying bonds with warrants.

In light of the following facts and circumstances acknowledged as a result of the review, it is difficult to avoid the possibility that S had acquired the instant bonds with warrants with the intent to obtain a short-term high-income with knowledge of the fact that the funds for capital increase in KRW 15 billion were raised by the fictitious payment method, and that the funds for capital increase in KRW 15 billion were not actually paid, and that the acceptance of the Kazatan mine was also low in feasibility. Therefore, such circumstance alone alone does not lead to the conclusion that the Defendant deceiving S for the purpose of selling the bonds with warrants, thereby using deceptive scheme, or having causation with the S’s disposal

A. S was a professional investor with professional knowledge about the KOSDAQ market situation or securities.

1) Around August 1982, S entered the Jeju Bank and took charge of stock and bond investment business in the Securities Investment Board for five years from the 1993 to the retirement. After retirement, S operated Company V, a consulting company related to securities investment, and was employed as the representative director of W, a KOSDAQ-listed company. From October 2006, S operated R, a securities investment company (Evidence 2, 241, 242).

2) The investment records of S in the past confirmed by the evidence submitted are as follows:

A) Around December 6, 2007, X entered into a contract with the acquisition of 4 billion won of convertible bonds to be issued on December 11, 2007 (Evidence 2, 255-258, evidence records). The maturity interest rate of the convertible bonds publicly announced at the time was 3% per annum (Evidence 1-1), and unlike the above, a side agreement was concluded where the return on investment was guaranteed by 18% (Evidence 1-2, evidence records 2, 256 pages).

B) On November 27, 2008, around 2008, 1,034,482 shares were subscribed to 6.76% of the total issued shares by participating in the Y Small-Sum public offering (Evidence 2-1, 2).

C) Around December 2008, around 26, 2008, 15 copies of the certificate of registration of convertible bonds issued by AA from Z were transferred (682 evidence records, 259 pages).

B. It is difficult to readily conclude that S did not know the fact that the subscription price for new shares was the most advanced payment.

1) According to the statement of financial position of the first quarter (from January 1, 2009 to March 31, 2009) of the 12nd quarter (from January 1, 2009 to March 31, 2009) published immediately before acquiring the instant bonds with warrants, the cash and cash assets out of the PP assets are merely KRW 59,715,69, and KRW 14,18,61,61,610, and the advance payment is confirmed to have been 14,18,61,610. In particular, the advance payment can be deemed to have been leaked most of the advance payment under the pretext of the increase of approximately KRW 14 billion compared to the former amount (as of December 31, 2008) and KRW 303,029,314.

2) The purpose of raising funds for capital increase with capital increase originally announced was to operate the company (public notice of the 682 Evidence No. 34 of the 682 Evidence No. 34 of the 682 Evidence No. 34), and there was no specific reason to spend a large amount of 14 billion won as advance payment, which could be sufficiently doubtful as to whether the paid-in capital increase with capital increase was repaid and whether it was treated as an advance payment.

3) Before acquiring bonds with warrants, S shall access the electronic public disclosure system of the Financial Supervisory Service and closely examine major public disclosure data including the statement of financial position (682 & 29 pages, S Recording Notes 3, 4 pages), and in light of the S’s career, investment records of securities, etc., it is highly likely that S could have identified the fact of best payment in the process of examining the disclosure data.

4) If a person acquires bonds with preemptive rights by taking important account of the success of capital increase with preemptive rights, such as S’s statement, immediately protesting against the defendant when he/she became aware of the disguised payment.

However, S made a statement that "Around November 2009, it became aware of the fact of fictitious payment through the published data of the Financial Supervisory Service" at the investigative agency (682 evidence record 2:30 pages 2); around that time, S demanded repayment of the principal and interest of bonds to the chief of the highest court dispatched to the defendant at that time; and did not raise any particular question as to the fact that S concealed the fact of fictitious payment (Evidence 1:69,70 pages 682 evidence record); and on November 26, 2012, S only stated that "a false transfer of P property was made for the purpose of evading compulsory execution while filing a criminal complaint against the defendant" (Evidence 682 evidence record 1:5-11 of evidence record, statement of the criminal complaint 91-103 page).

S stated to the effect that it filed an appeal against a non-guilty disposition against the above complaint, and that "the defendant deceivings the defendant as to whether to make the fictitious payment of the capital increase with consideration during the re-investigation stage." However, there is a reasonable doubt as to the authenticity of the above statement in light of the circumstances of the statement.

C. It is difficult to view that the maximum payment of subscription price for new shares or the possibility of delisting therefrom was an important factor in determining the subscription price for bonds with warrants.

1) In the case of the companies invested as set forth in the above A. 2 (No. 9 pages of the judgment), it is confirmed that S has de-listing all within two months or six months from the time of investment (Evidence 1-2-4, No. 2-3, No. 3-5 of the evidence No. 1-2, No. 3-5 of the evidence No. 1-2). In particular, in the case of AA, around August 15, 2008, prior to the transfer of the registration certificate of convertible bonds by S, it was designated as a management issue on the grounds of the “suspension of business already ordered, improper opinion, refusal of opinion, or restriction on the scope” (Evidence 3-2 of the evidence No. 3 of

2) In this court, S did not seem to pose a risk of delistinging the instant bonds with warrants issued by P in December after the settlement of accounts. Since the investment period was two months, S did not think that P would be delisting within that period. Although it was planned to recover the investment amount through small-sum public offering, capital increase with new stocks, or capital increase with new stocks, or capital increase with new stocks, which is not required to approve the Financial Supervisory Service, it was considered to have been able to recover the investment amount within two to three months since it was possible to make a short public offering (SM No. 5, No. 11).

3) In light of the above circumstances, S may be deemed to have invested in the securities of the company with high risk for high profit. In particular, in the case of the instant bonds with warrants, as it was planned to recover the acquisition price through small-sum public offering within two to three months prior to the occurrence of the risk of delisting, it may be deemed that the possibility of delisting is not directly related to the decision of acceptance. In fact, S testified in this court to the question, “I would like to answer to the question, “I would like to say that the company has not achieved the objective of 2 months,000,0000 won, regardless of whether it is a proper capital increase or a capital increase through the fictitious payment.” (SM No. 8, nine pages).

D. In relation to the acquisition of the Kazakin mine, S voluntarily stated that “the defendant would take over the mine in the Kazakin mine” in this court, but did not think that it would actually be realized. It did not have a significant weight in the decision to accept the bonds (SM No. 5, No. 7 pages), and therefore, it is difficult to view that the defendant deceivings S as to this point.

5. Conclusion

This part of the facts charged constitutes a case where there is no proof of facts constituting an offense, and thus, is pronounced not guilty under the latter part of Article 325 of the Criminal Procedure Act, and it is so decided as per Disposition with a public notice of the summary of judgment under Article 58

The presiding judge, Kim Dong-dong,

Judges Powers Presiding Justice

Judges Kim Jae-won