[1] Where a third party uses funds for purposes other than for a limited purpose upon being entrusted with a limited amount of funds, whether the crime of embezzlement is established (affirmative), and where it is difficult to readily conclude that the crime of embezzlement is established solely on the ground that the company manager provided funds for purposes other than the original purpose when such funds are disbursed for the

[2] In a case where Defendants (joint operators of Gap corporation) were indicted for occupational embezzlement on the ground that they conspired with several persons in charge of fund management of Eul corporation, and used the shipbuilding advance received from Eul corporation under the shipbuilding contract concluded with Gap corporation for other purposes, such as repayment of loans from Gap corporation, the case holding that the court below erred by misapprehending the legal principles in finding guilty on the ground that it is difficult to readily conclude that the above advance payment was strictly limited for shipbuilding, or that Byung had an intent to acquire illegal profits

[1] An act of using funds for purposes other than for a limited purpose upon being entrusted with a strictly limited purpose by others is an act of using funds itself, which realizes the intent of unlawful acquisition, and thus constitutes embezzlement. However, if a corporate manager uses funds for a company, not only the purpose of using funds is strictly limited by the provisions of statutes or the internal regulations of the company, but also the normal procedure inside the company for executing funds, it cannot be readily concluded that there was an intent of unlawful acquisition solely on the ground that the funds were disbursed for purposes other than the original purpose.

[2] In a case where the Defendants, joint operators of Gap corporation, were indicted for occupational embezzlement on the ground that Eul corporation used the shipbuilding advance received from Eul corporation for any other purpose, such as the repayment of loans from Eul corporation under the shipbuilding contract concluded with Eul corporation, the case holding that the judgment below erred by misapprehending the legal principles on the ground that, in the event that Eul company and Eul company issued the advance payment payment guarantee certificate and Eul company withdrawn funds deposited in the advance account when entering into an advance payment management agreement, Eul company should submit evidentiary documents to the insurance company and obtain review and confirmation, and if Eul did not submit evidentiary documents or used advance payments for any purpose other than shipbuilding, the insurance company is required to demand the suspension of withdrawal, etc., even if Eul company bears the liability under the above agreement, such circumstance alone does not necessarily mean that its use was strictly limited in relation to Eul's employees conducting advance payments within Eul company, and if Eul used the funds as an affiliate company after normal accounting management, it is hard to conclude that Eul company's funds manager was guilty on the ground that it constitutes occupational embezzlement, separate from the crime of occupational breach of trust.

[1] Articles 355(1) and 356 of the Criminal Act / [2] Articles 30, 355(1), and 356 of the Criminal Act; Article 3(1) of the former Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Amended by Act No. 11304, Feb. 10, 2012)

[1] Supreme Court Decision 2003Do6988 Decided May 27, 2004 (Gong2004Ha, 1120) Supreme Court Decision 2008Do1652 Decided May 8, 2008

Defendant 1 and one other

Defendants and Prosecutor

Law Firm Cheongdam et al.

Seoul High Court Decision 2011No2256 decided December 27, 2011

The entire conviction part of the judgment of the court below against the Defendants is reversed, and that part of the case is remanded to the Seoul High Court. The prosecutor’s appeal on the acquittal part is dismissed.

The grounds of appeal by the Defendants and the prosecutor (to the extent of supplement in case of supplemental appellate briefs not timely filed) are examined together with the facts charged.

1. As to the preparation of qualification-based private documents, qualification-raising private documents, display of private documents, violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud), fabrication of private documents, uttering of private investigation documents, and breach of trust in the course of occupational breach of trust

The court below acquitted all the defendants, in collusion with the non-indicted 2 corporation and the non-indicted 4 and 5, who jointly operated the non-indicted 1 corporation (hereinafter referred to as "non-indicted 1 corporation", and omitted the entry of "the non-indicted 3 corporation"), on the grounds that the non-indicted 1 corporation prepared a charter contract containing a "substitute agreement" to the effect that the non-indicted 1 corporation will jointly and severally guarantee the obligations of the non-indicted 1, unlike the actual contents of the charter contract entered into with the non-indicted 2 corporation and the non-indicted 3 charter party, or that they acquired it by deceiving the financial institution by means of submitting it to the financial institution, etc., on the grounds that it cannot be deemed that the defendants knew that the non-indicted 4 et al. prepared the charter contract, etc. without undergoing the internal resolution procedure, or that they had the criminal intent to obtain fraud.

Examining the reasoning of the judgment below in comparison with records, the above judgment of the court below is just and acceptable, and contrary to the prosecutor's grounds of appeal, there were no errors in the misapprehension of legal principles as to the scope of adjudication without modification of an indictment, or in violation of the principle of free evaluation

2. As to the giving of property in breach of trust

A. As to the assertion against the principle of non-defluence

The court may, within the scope consistent with the facts charged, recognize facts constituting a crime different from the facts charged as stated in the indictment ex officio, even if the indictment has not been modified, in case where it is deemed that there is no concern that a substantial disadvantage may be caused to the defendant’s exercise of his right to defense, in light of the progress of the trial within the extent consistent with the facts charged (see Supreme Court Decision 2005Do6433, Mar

The court below determined that the defendant's exercise of the right to defense was not a substantial disadvantage in light of the trial process, such as the fact that "the defendant requested the non-indicted 5 to prepare a false charter contract, a charter contract, and a charter contract to the non-indicted 5 with the non-indicted 3 tank vice head and delivered USD 110,00 in total on four occasions in the name of the honorarium for the charter contract." However, although the court below acknowledged the fact that "the defendant provided the non-indicted 5 with convenience such as preparing a charter contract, etc. necessary for ship financing, and delivered USD 110,00 in total on four occasions in the name of the honorarium for the charter contract," the defendant did not recognize any new solicitation that is not included in the facts charged while partially reducing the facts as to the contents of the solicitation, and it does not recognize any new solicitation that the defendants also requested the non-indicted 5 to prepare a charter contract, etc.

In light of the above legal principles and the records, the above judgment of the court below is just and acceptable, and there is no violation of the principle of no accusation against the Defendants, as otherwise alleged in the grounds of appeal.

B. As to the assertion that there was no illegal solicitation

(1) In the crime of breach of trust and inheritance, the term "illegal solicitation" is sufficient if it does not necessarily require that it constitutes the substance of occupational breach of trust, and it is against the social rules or the principle of good faith. In determining this, the contents of the solicitation and the amount of the consideration related thereto, forms, and the integrity of transactions, which are the legal interests protected by the law, should be comprehensively considered. The solicitation is not necessarily required to be explicitly and implicitly made (see Supreme Court Decision 2005Do1732, Jun. 9, 2005, etc.). In addition, in a case where the nature of other acts as consideration for illegal solicitation and the nature as cases of other acts are indivisible with respect to money and valuables provided to a person who administers another person's business, such solicitation shall be deemed as having the nature of the consideration for illegal solicitation in its entirety indivisible (see Supreme Court Decision 2010Do15989, Feb. 24, 2011, etc.).

In addition, in cases where money and valuables have been given to a person who administers another person's business by making an illegal solicitation in connection with his/her duties and several times, they have been repeatedly made for a certain period under the criminal intent of a single and continuous crime, and if such legal interests are the same, they shall be deemed an inclusive crime (see Supreme Court Decision 2008Do6987, Dec. 11, 2008, etc.).

(2) The lower court determined that: (a) in its conclusion of the charter contract between Nonindicted Company 1 and Nonindicted Company 3, USD 110,00 constitutes an illegal solicitation to request convenience in the course of trading, such as the charter contract between Nonindicted Company 1 and Nonindicted Company 3; and (b) even if the above 110,000 dollars includes some of the 110,000 dollars, as long as it is inseparably combined with the quid pro quo of illegal solicitation, the above 110,00 dollars constitutes an illegal solicitation. Furthermore, the lower court determined that the Defendants’ 4 times of the crime of giving property in breach of trust constitutes a single and continuous crime committed repeatedly under a single and continuous criminal offense, which constitutes a blanket crime, and thus, the statute of limitations has not expired as of the end of the final crime.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal by the defendants, there were no errors in the misapprehension of the legal principles on "illegal solicitation", the number of crimes, and the completion of the statute of limitations.

C. As to Defendant 1’s assertion that it cannot be viewed as a co-principal

In relation to co-offenders who are jointly engaged in a crime, the conspiracy does not require any legal punishment, but is only a combination of two or more persons to jointly process a crime and realize the crime. Even if there was no process of the whole conspiracy, if the combination of intentions is made in order or impliedly through several persons, the conspiracy relationship is established. As long as such conspiracy was made, even if there was no direct involvement in the conduct, the person who is not directly involved in the conduct of the crime is held liable for criminal liability as a co-principal. The above conspiracy can be acknowledged by the circumstantial facts and empirical rules without direct evidence (see, e.g., Supreme Court Decision 2002Do868, Jun. 28, 2002).

The lower court determined that Defendant 1 also participated in the crime of giving rise to breach of trust by Defendant 2 in full view of the following circumstances, including the fact that Defendant 1 was taking a leading role more than Defendant 2 in the management of Nonindicted Company 1, the size and business importance of the charter contract concluded by Nonindicted Company 1 with Nonindicted Company 3, and USD 110,000 were withdrawn from the overseas confidential account of Nonindicted Company 1, and the amount was also large.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to co-principal as alleged in the ground of appeal by Defendant 1.

3. As to the embezzlement of Nonindicted Company 1’s funds for the acquisition of individual shares

A. As to the Defendants’ grounds of appeal on the remaining parts except for the part related to the acquisition of Nonindicted 6 and Nonindicted 7 Stock Companies

According to the reasoning of the judgment below and the records, in the first instance court, the defendants asserted not guilty as to the part concerning the takeover of the non-indicted 6 corporation and the non-indicted 7 corporation among these facts charged, and each appellate brief submitted within the period for submitting the appellate brief only stated the grounds for appeal and did not state the grounds for appeal as to the remaining part except the above part. Further, even if there are legitimate grounds for appeal as to the remaining part, the court below can find that there was an additional decision that the intention of illegal acquisition can be recognized. Thus, the judgment of the court below is not erroneous in omitting judgment as to the grounds

In addition, the representative director of the company or a person who has carried out de facto affairs related to the custody and management of the company's funds for purposes other than provisional payments for the company, and the company's funds are not subject to an agreement on interest or maturity in using them for purposes other than provisional payments for the company, and the company's funds are not leased or disposed of for private purposes by using the status of the representative director, etc. beyond the generally acceptable scope, and thus constitutes embezzlement. (See Supreme Court Decision 2003Do135, Apr. 27, 2006, etc.) In addition, since the defendants who jointly carried out the non-indicted 1's funds have failed to submit or obtain evidence of the reasons for withdrawal and use while the defendants failed to use them more than once in the form of loans or provisional payments, it does not appear that the defendant's funds of the non-indicted 1 were owned or used for the purpose of seeking the interests of himself or a third party, it constitutes the crime of embezzlement or embezzlement as a part of the grounds for appeal.

B. As to the grounds of appeal by the prosecutor on the part related to the acquisition of Nonindicted 6 and Nonindicted 7 Co.

The lower court rejected the Defendants’ assertion that the said shares were acquired by Nonindicted Company 6 and Nonindicted Company 7 in the name of the Defendants or their wife using Nonindicted Company 1’s funds, but in light of the relevant circumstances, it is difficult to readily conclude that the Defendants embezzled the funds of Nonindicted Company 1 in order to acquire individual shares, and that it was difficult to conclude that the said shares were acquired by Nonindicted Company 1 in the name of the Defendants.

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

4. As to embezzlement of shipbuilding funds

A. An act of using funds entrusted by others for purposes other than the limited purpose is an act of using funds itself, which realizes the intent of unlawful acquisition, and thus constitutes embezzlement (see Supreme Court Decision 2003Do6988, May 27, 2004, etc.). However, if a corporate manager disbursed funds for a company for the purpose of the company, the purpose of the funds is not strictly limited by the provisions of statutes or the internal regulations of the company, and if the funds have been disbursed for the purpose other than the original purpose, it cannot be readily concluded that there was an intent of unlawful acquisition solely on the ground that the funds have been disbursed for the purpose other than the original purpose.

B. As to the embezzlement of the shipbuilding fund of Nonindicted Company 8

The court below found that the non-indicted 1 and the non-indicted 8, and the non-indicted 9 were ordered to issue an advance refund guarantee regarding the shipbuilding contract that the non-indicted 1 signed with the non-indicted 8 with respect to the non-indicted 1 and the non-indicted 8 and the non-indicted 9, when entering into an account management agreement with respect to the shipbuilding advance that the non-indicted 8 borrowed from the new bank, etc. and paid to the non-indicted 8, in order to withdraw the funds deposited into the advance account, the non-indicted 8 shall submit evidentiary documents to the non-indicted 9 insurance company, and if the non-indicted 8 did not submit evidentiary documents at the time of withdrawal of the fund or used the advance for any purpose other than shipbuilding, the non-indicted 9 agreed to demand the suspension of withdrawal from the advance account to the non-indicted 8 company for the purpose other than shipbuilding, and therefore, the defendants' use of the advance payment from the non-indicted 1 in collusion with the vice president of the non-indicted 8, constitutes a crime of occupational embezzlement.

However, the above determination by the court below is difficult to accept in light of the above legal principles and records.

With respect to the construction of KY-104~KY-106, etc., the court below’s flexible grounds that the use of the advance received from Nonindicted Company 1 was strictly limited to the shipbuilding fund is the account management agreement that Nonindicted Company 8 entered into with Nonindicted Company 9 and the new bank.

However, even if Nonindicted Company 8 bears the obligation under the above account management agreement, it cannot be readily concluded that the purpose of the above advance payment was strictly limited for shipbuilding in relation to Nonindicted Company 8’s employees, solely on the ground that such agreement was concluded.

In addition, even if Nonindicted Company 8 bears the obligation to use the advance payment for shipbuilding under the above account management agreement, if Nonindicted Company 8’s fund executor provided funds to Nonindicted Company 1, an affiliate through normal accounting management, rather than private use, it is difficult to readily conclude that there was an intent to acquire unlawful acquisition in the crime of occupational embezzlement, even if the act constitutes the crime of occupational breach of trust, regardless of whether it constitutes the crime of occupational breach of trust.

Nevertheless, the lower court, contrary to its stated reasoning, recognized this part of the facts charged as the crime of occupational embezzlement. In so doing, the lower court erred by misapprehending the legal doctrine on the identity of property in the crime of occupational embezzlement and the intention of unlawful acquisition, thereby adversely affecting the conclusion of the judgment. The Defendants’ allegation in the grounds of appeal on this point is with merit.

C. As to the embezzlement of Nonindicted Company 11’s shipbuilding funds

The court below found the Defendants not guilty on the part of the facts charged in collusion with Nonindicted 11’s representative director, Nonindicted 12, and embezzled the advance for the purpose of building a ship in collusion with Nonindicted 11’s company’s non-indicted 13 for another purpose, on the ground that the use of the advance payment that was made on December 26, 2008 by the aforementioned advance payment agreement was a part of the advance payment, the use of which was strictly limited for building a ship, and thus, it constitutes an occupational embezzlement and a co-principal who was involved in other purposes. On the other hand, the court found that the remainder of the advance payment was a limited advance, and thus, it cannot be readily concluded that it was an advance payment.

In light of the above legal principles and records, the part of the judgment of the court below which acquitted the defendant among the above judgment is just and there is no violation of law such as misunderstanding of legal principles as argued in the Grounds for Appeal.

However, it is difficult to accept the part recognized as occupational embezzlement in light of the above legal principles and records.

The reasoning of the lower court that the use of the advance received by Nonindicted Company 11 from Nonindicted Company 13 in connection with the construction of the vessel in MPC S-103 and S-105 was strictly limited to the shipbuilding fund is the advance use agreement concluded between Nonindicted Company 11 and Nonindicted Company 13.

However, even if Nonindicted Company 11 bears an obligation under the above advance payment agreement, it cannot be readily concluded that the purpose of the said advance payment was strictly limited for shipbuilding in relation to Nonindicted Company 11’s employees, solely on the fact that such agreement was concluded.

In addition, even if Nonindicted Company 11 bears the obligation to use the advance payment for shipbuilding by the aforementioned advance payment agreement, if Nonindicted Company 11’s fund executor is not privately useful, but provides funds to Nonindicted Company 1, an affiliate, through normal accounting management, it is difficult to readily conclude that the act constitutes an intent to acquire illegal gains in the crime of occupational embezzlement, regardless of whether the act constitutes an occupational breach of trust.

Nevertheless, the lower court recognized this part of the facts charged as an occupational embezzlement. In so doing, the lower court erred by misapprehending the legal doctrine on the misappropriation of property and intent to acquire unlawful acquisition in the occupational embezzlement, thereby adversely affecting the conclusion of the judgment. The Defendants’ ground of appeal assigning this error is with merit.

5. As to the embezzlement of Nonindicted Company 8’s funds under the name of brokerage commission, etc.

The lower court upheld the first instance judgment that held that Defendant 1’s act of “Nonindicted Company 14,” which was the overseas pagecomer of Nonindicted Company 1, pretended to have mediated the shipbuilding contract of Nonindicted Company 8, withdrawing the funds of Nonindicted Company 8 under the name of the said company, and remitting them to the account under the name of the said company, and making Nonindicted Company 1 paid the charterage of Nonindicted Company 1 with the funds of Nonindicted Company 8 constitutes occupational embezzlement, constitutes a crime of occupational embezzlement, and also Defendant 2 also bears the responsibility for the crime as a co-principal who was involved.

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 by the defendants, there were no errors of misapprehending the principles of private autonomy or the legal principles on co-principal.

6. As to the embezzlement of Nonindicted Company 1’s funds by using overseas pesters

In a case where the Defendants acknowledged the use of the company’s non-financial expense but denied the existence of an intent of unlawful acquisition by asserting that the Defendants withdrawn and used the non-financial expense for the company, the determination should be made as to whether the use of the non-financial expense claimed by the Defendants is reasonable to bear the company’s expense, including whether the use of the non-financial expense was ordinarily incurred in the course of the company’s management, and whether the decision on the specific timing, object, scope, amount, etc. of the use of the non-financial expense was made objectively and reasonably, and whether the decision was made objectively and reasonably, circumstances, and result, etc., comprehensively taking into account whether the main purpose of the use of the non-financial expense can be deemed to be for personal use of the Defendants or whether the existence of the intent of unlawful acquisition can be recognized (see Supreme Court Decision 2007Do4784, Feb. 26, 20

The court below found the defendants guilty of the crime of occupational embezzlement on the part of the facts charged that the defendants raised the secret funds of the non-indicted 1 using the non-indicted 14's account and embezzled them for personal use, etc., based on the following circumstances in its holding: (a) the defendants merely asserted that they used them as entertainment expenses for the non-indicted 1; (b) the specific period of use, target, scope, and amount was not disclosed; and (c) some funds were remitted to the borrowed name account managed by the defendant 2; and (d) the part of the funds was remitted to the borrowed name account managed by the defendant 2.

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

7. As to the fraud of insurance money

The court below found Defendant 1 not guilty on the facts charged of this part of the charges that the Defendants acquired insurance money from an insurance company by submitting a false estimate of repair costs upon the occurrence of an insurance accident regarding the vessel belonging to Nonindicted Company 1, on the ground that Defendant 1’s confession at the prosecutor’s office is difficult to believe due to its stated reasoning, and there is no other evidence to prove

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

8. Conclusion

Therefore, the guilty part of the judgment of the court below should be reversed among the embezzlement of Nonindicted Company 8’s vessel building funds and embezzlement of Nonindicted Company 11’s vessel building funds. Since the court below rendered a single sentence by deeming this part of the judgment below as concurrent crimes with the remaining guilty part under the former part of Article 37 of the Criminal Act, the entire conviction part of the judgment below against the Defendants is reversed, and this part of the case is remanded to the court below for a new trial and determination, and all of the appeals by the prosecutor are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)