The legislative intent of the Act on the Regulation of Conducting Fund-Raising Activities / Cases where receiving funds through the transaction of goods can be deemed an act of fund-raising activities prohibited under Article 3 or subparagraph 1 of Article 2 of the same Act.

Article 1, Article 2 subparag. 1, Article 3, and Article 6(1) of the Act on the Regulation of Conducting Fund-Raising Business without Permission

Supreme Court Decision 2006Do7470 Decided January 25, 2007 (Gong2007Sang, 401), Supreme Court Decision 2007Do6241 Decided October 25, 2007, Supreme Court Decision 2015Do14373 Decided September 8, 2016

Defendant

Prosecutor

Law Firm Western, Attorneys Lee Jong-hwan et al.

Seoul Central District Court Decision 2017No4331 Decided March 29, 2018

Of the judgment below, the part of aiding and abetting the violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission and the Regulation of Conducting Fund-Raising Business without Permission is reversed, and that part of the case is remanded to the Seoul Central District Court.

The grounds of appeal are examined.

1. The part concerning fraud and fraud

For the reasons indicated in its holding, the lower court acquitted all of the charges of aiding and abetting fraud, which is the primary charge, on the ground that there is no proof of crime. Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err in its judgment by failing to exhaust all necessary deliberations, thereby exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on the criminal intent of

2. Violation of the Act on the Regulation of Conducting Fund-Raising Business without Permission (hereinafter “Act”) and aiding and abetting the violation of the Act on the Conducting Fund-Raising Business without Permission

A. The part on the violation of the Act on the Receiving of Similar Loans

For the reasons indicated in its holding, the lower court acquitted the Defendant on the charge of violating the Act on the Collection of Similar Goods, which is the primary charge. Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the bounds of the principle of free evaluation of evidence against logical and empirical rules or by misapprehending the relevant legal principles, which affected the conclusion

B. The part concerning aiding and abetting the violation of the Act

1) The summary of the facts charged in this part is as follows.

The Defendant aided and abetted the Nonindicted Company’s operators to agree to pay more than the amount of their investment in the future and to pay more than the amount of their investment in the account for each member of the said Company by explaining the profit dividends and guarantee of principal for the purchase of advertising factorings posted on the website of the Nonindicted Company, a foreign corporation’s Internet homepage, which opened a name-free operator and engages in the business of receiving the investment, and soliciting the investment, and transferring it to the account of the said company.

2) For the following reasons, the lower court reversed the first instance judgment that found the Defendant guilty on the grounds that there is insufficient proof of the principal offender’s criminal act, and sentenced the Defendant not guilty.

A) It is not clear whether the Korean law is applied because the nationality of the non-indicted corporation as a principal offender is unknown, and what laws are applied if it is not the Korean law.

B) According to the instant business explanation posted on the website of the Nonindicted Company, it is difficult to view that there is proof as to whether the operator, who is a principal offender, concluded a principal guarantee agreement under Article 2 subparag. 1 of the Act on the Unauthorized Receipt of Contracts, or obtained permission, registration, or report under the statutes.

3) However, it is difficult to accept such determination by the lower court for the following reasons.

A) Article 3 of the Act on the Receipt of Funds provides that “any person shall be prohibited from performing the act of receiving funds without permission or authorization under other Acts and subordinate statutes.” Article 2 Subparag. 1 provides that “any person shall not engage in the act of receiving funds from an unspecified number of unspecified persons without permission or authorization under other Acts and subordinate statutes as one of the act of receiving funds from an unspecified number of unspecified persons.” The legislative intent of prohibiting the act of receiving funds without permission or authorization under related Acts and subordinate statutes lies in regulating the act of raising funds under the pretext of investment, deposit, etc. from an unspecified number of unspecified persons, thereby protecting good customers and establishing a sound financial order. In light of the legislative intent of the Act on the Receipt of Funds without Permission or the meaning of the term “contribution” under the same Act and the statutory provision, it is difficult to view the act of receiving funds that are actually mediated in the transaction of goods as the act of receiving funds, and it can be seen as an act of receiving funds without permission under the Act on the Receipt of Funds, limited to cases where it can be seen as a transaction of goods (see, e.g., Supreme Court Decision 20036Do1647.

B) According to the reasoning of the lower judgment and the evidence duly admitted and examined by the lower court, the following circumstances are revealed.

(1) The purpose of the agreement on the payment of profits posted on the website of the Nonindicted Company is to pay the profits above the purchase cost in a fixed period of time, such as that the investor would be paid 150% of the purchase cost if the investor purchased the advertising factoring and performed the advertising guide, etc. for 88 days, and the advertising guide, etc. presented as the terms and conditions for the payment of profits, are the act that can be easily performed at least 20 times a day by reporting the Internet distribution advertisement by up to 20 times a day.

(2) In light of the terms and conditions of “shft” posted on the Nonindicted Company’s website, the purport is to temporarily delay the timing of payment of profits when excess of the obligation to pay profits to the company’s assets, and it does not mean that the agreed profits are not paid. Moreover, even if the terms and conditions of “shft” are issued, the deferred profits for each member are indicated electronically, and in fact, most the Defendant and the instant investors were understood as the temporary postponement of payment of profits on the terms and conditions of “shft.”

(3) The Defendant stated at an investigative agency to the effect that the Nonindicted Company was aware that it was in California and did not obtain the domestic authorization.

(4) The operators of Nonindicted Co., Ltd. sold advertising factorings while advertising membership recruitment advertisements and concluding an agreement for payment of profits through the Internet homepage. The act of the instant investors joining Nonindicted Co., Ltd. as a member of the Nonindicted Co., Ltd. and concluding an agreement for payment of profits, and the Defendant’s act of remitting advertising factorings to the account in the name of Nonindicted Co., Ltd. in foreign currency upon delegation by

C) As long as the act of entering into an agreement on fund-raising, which is part of the act of fund-raising and receiving investments under the above agreement, was conducted within the territory of the Republic of Korea, the crime was committed within the territory of the Republic of Korea even if the place of opening the Internet homepage or the place of receiving investments was located outside the territory of the Republic of Korea (see, e.g., Supreme Court Decisions 99Do3403, Apr. 21, 200; 2012Do2626, Apr. 26, 2012). As such, Articles 2 and 8 of the Criminal Act apply to the non-indicted company’s non-operators under the penal laws of the Republic of Korea.

In addition, examining the above circumstances in light of the legal principles as seen earlier, the operators of the non-indicted company agreed to pay profits in excess of the paid-in capital from investors without obtaining authorization, permission, etc. under the relevant domestic laws and regulations, and the act of advertising reporters, etc. conducted by investors is merely for the purpose of pretending to provide services or iceing to do so, and thus, it constitutes a transaction of money. Thus, this constitutes an act of receiving money without permission under Article 2 subparag. 1 of the Act on the Receipt of Similar Loans. Furthermore, as long as an agreement to pay an amount in excess of the paid-in capital is made, it is not determined differently

D) Nevertheless, the lower court determined that solely on the grounds as seen earlier, it is not clear whether a principal offender’s criminal act is subject to penal provisions of the Republic of Korea, and that the agreement on the payment of profits posted on the website of the Nonindicted Company did not constitute an act of fund-raising without delay as stipulated in Article 2 subparag. 1 of the Act, and thus, there is insufficient proof of the principal offender’s criminal act. In so doing, it erred by misapprehending the legal doctrine on the act of fund

3. Scope of reversal

For the foregoing reasons, the part of the lower judgment on aiding and abetting the violation of the Act on the Receipt of Similar Loans, which is the ancillary charge, should be reversed, and the part on the violation of the Act on the Receipt of Similar Loans, which is the primary charge of the same body, cannot

4. Conclusion

Therefore, among the judgment of the court below, the part of aiding and abetting the violation of the Act on the Receipt of Similar Funds and the Act on the Receipt of Similar Funds is reversed, and the case is remanded to the court below for further proceedings consistent with this Opinion. The prosecutor's remaining grounds of appeal are dismissed. It is so

Justices Noh Jeong-hee (Presiding Justice)