CONTENTS
- 1. The Parties and Proceedings in the Embezzlement Punishment Case
- - The Lower Court's Judgment in the Embezzlement Punishment Case, the "Order for Collection of Equivalent Value"
- 2. What Was the Supreme Court's Judgment in the Embezzlement Punishment Case?
- 3. What Are the Statutes and Precedents Relating to the Punishment of Embezzlement?
- - Embezzlement Punishment, Daeryun's Strategy
1. The Parties and Proceedings in the Embezzlement Punishment Case
■ Defendant A
: The representative director of a company engaged in overseas real estate and hotel development
■ Background of the Case
1> Defendant A was a businessman who served as the representative director of a company involved in overseas real estate development (hereinafter Company 1) and of a company involved in an overseas hotel business (hereinafter Company 2).
2> A sold the site for Company 2's hotel development project for approximately 24 million dollars and first paid the settlement amounts owed to individual investors. A then decided to hold the remaining 9.2 million dollars for purposes such as settling the business with Company 1 and paying the capital reduction proceeds owed to Company 1.
3> However, A believed that, if this money were paid to Company 1 as settlement, it would be attached by Company 1's creditors, and A was concerned that, in that event, he would be unable to use the money.
4> A consequently decided not to remit this money to Company 1, but instead to acquire it under his wife's name and use it at his own discretion.
5> A prepared a false contract as though Company 2 and his wife had entered into a consulting service agreement for the hotel development project, and paid 6 million dollars to his wife. A was later brought to trial on charges including embezzling Company 2's corporate funds.
The Lower Court's Judgment in the Embezzlement Punishment Case, the "Order for Collection of Equivalent Value"
1> The lower court found the charges of embezzlement and breach of trust under the Act on Aggravated Punishment of Specific Economic Crimes (a Korean statute imposing aggravated punishment for economic crimes based on the amount involved, with no direct common-law equivalent) to be guilty. However, as to the charges of evasion of compulsory execution and violation of the Depositor Protection Act, it found that the crimes had not been proven and rendered a judgment of acquittal.
2> There was, however, a point on which the lower court differed from the court of first instance. The lower court also ordered the collection of equivalent value for the embezzled amount of 6 million dollars. Although A had redeposited the 6 million dollars into an account held in Company 2's name, the reasoning was that, so long as A could still exercise the authority to dispose of that property by using his position, Company 2's loss could not be regarded as having been recovered.
2. What Was the Supreme Court's Judgment in the Embezzlement Punishment Case?
To begin with, the Supreme Court held that there was no error in the finding of guilt on the charges of embezzlement and breach of trust under the Act on Aggravated Punishment of Specific Economic Crimes, or in the acquittal on the charges of evasion of compulsory execution and violation of the Depositor Protection Act, and it upheld the lower judgment in those respects.
As to the lower court's "collection of the embezzled amount," however, the Supreme Court took issue. On the “recovery of the loss from embezzlement,” it reached a determination different from that of the lower court.
The Supreme Court pointed out that, once A had deposited the 6 million dollars into the account held in Company 2's name, the property loss that Company 2 had previously suffered should be regarded as already recovered.
It also explained that, as the prosecutor argued, if A were to withdraw and use the 6 million dollars deposited into Company 2's account at his own discretion, that too would constitute a "new offense of embezzlement"; but in order to argue that A was likely to newly commit such an offense, clear proof had to be established first.
In other words, unless the prosecutor proves this with objective evidence, it is improper to order confiscation or collection of equivalent value on the premise of a merely abstract possibility.
3. What Are the Statutes and Precedents Relating to the Punishment of Embezzlement?
Article 6 (Special Cases concerning Property Damaged by a Crime) (1) Where the property under Article 3 is property damaged by a crime and the victim of the crime is unable to exercise, with respect to that property, a right to claim the return of property or a right to claim damages against the offender, and the like, so that recovery of the damage is deemed extremely difficult, it may be confiscated or its equivalent value collected.
Embezzlement Punishment, Daeryun's Strategy
A court's order of "confiscation or collection of equivalent value" is a system intended to restore the property loss that a victim has suffered as a result of a specific criminal act.
As noted earlier in the relevant statutes and precedents, the collection of equivalent value has "the character of a penalty," and it must therefore be interpreted more strictly.
In particular, because expansive or analogical interpretation is prohibited in criminal trials governed by the principle of legality, when ordering confiscation or collection of equivalent value, the question of whether “recovery of the damage is deemed extremely difficult” should be analyzed more objectively.
It remains to be seen what changes this Supreme Court judgment may bring to the process of confiscation and collection of equivalent value involving corruption property going forward.
The Corporate Legal Group of Daeryun Law Firm LLP, in connection with court orders of confiscation and collection of equivalent value, develops strategies to minimize the risks that may be imposed on a company and provides related legal advice.
In addition, where a company becomes involved in a criminal case, the Group works to protect the company's interests by gathering the necessary evidence and establishing a professional defense strategy.
If you have any questions regarding these matters, you are welcome to reach out to Daeryun Law Firm at any time.
