CONTENTS
- 1. Aiding and Abetting Fraud, What Were the Detailed Circumstances?
- - Aiding and Abetting Fraud, What Is the Related Information?
- 2. Aiding and Abetting Fraud, What Was the Court's Determination?
- 3. Aiding and Abetting Fraud, What Is Daeryun's Strategy?
1. Aiding and Abetting Fraud, What Were the Detailed Circumstances?
The defendant in this lawsuit, which concerned aiding and abetting fraud, is a public-institution foundation that received funds from the Korea Electric Power Corporation and was carrying out a project to support solar power generation plants. The plaintiffs are employees of OO Corporation, which was an intended beneficiary of that project.
Having been selected for this project, OO Corporation was obligated to submit details of how the proceeds were used to the foundation, and it had to spend at least 65% on job creation and other principal purposes of the project. If it was confirmed that the proceeds had not been used as planned, disadvantages such as the recovery of the proceeds would result.
A, an employee in charge of inspecting compliance with the project at the defendant foundation, lied to the plaintiffs, telling them, "In order to avoid the audit, we need false job-creation results," and, "If you sign false employment contracts and deposit one year's wages into a personal account, I will return the money two weeks after the job-creation results are reported." Believing this, the plaintiffs transferred a total of 413 million won to A, but A spent this money at will.
After learning that A's conduct was fraud, OO Corporation filed a claim for damages against A and the defendant foundation, as A's employer.
Aiding and Abetting Fraud, What Is the Related Information?
Aiding and abetting fraud refers to the act of facilitating the commission of another person's fraud and thereby enabling that person to obtain a pecuniary benefit.
🔗The crime of fraud may be punishable by imprisonment for up to 10 years or a fine of up to 20 million won,
while aiding and abetting fraud may be punishable by imprisonment for up to 5 years or a fine of up to 10 million won.
For aiding and abetting fraud to be established, there may be material assistance, such as lending tools for the crime or providing a place for it. In addition, psychological assistance, such as advising on, encouraging, or counseling the criminal act, or providing a false alibi, is also included.
The most important element in aiding and abetting fraud is intent. Whether the person was aware that his or her conduct was a criminal act has a significant effect on the judgment.
If a person has the intention to obtain a benefit and, in order to realize that intention, uses unlawful means and thereby causes property loss to another, punishment is possible.
2. Aiding and Abetting Fraud, What Was the Court's Determination?
In the first-instance proceedings on the lawsuit concerning aiding and abetting fraud, the court rendered a judgment partially in favor of the plaintiffs, holding that "all claims against the foundation are dismissed, and A shall pay the plaintiffs a total of 413 million won."
The court determined that "the plaintiffs were clearly aware of the fact that they had made it appear, through the preparation of false employment contracts and the transfer of money under the guise of wages, that the proceeds had been used for job creation, and that they followed A's request for cooperation even though they could sufficiently have known that the request was not legitimate in substance or in form."
The court also assessed that "although disadvantages such as the recovery of the proceeds could arise if the labor-cost ratio in the project did not reach 65%, the plaintiffs' act of preparing false employment contracts to feign job creation while accepting such a risk was not a legitimate performance of the project," and that "for the plaintiffs to have cooperated in the unlawful conduct by following the instructions without raising any doubt or objection, even though A's unlawful conduct was clear, constituted gross negligence."
Accordingly, while the court recognized that the plaintiffs were to be compensated for the harm caused by A's deceptive conduct, it dismissed the claim for damages against the defendant foundation, as A's employer, based on Article 756* of the Civil Act.
The plaintiffs appealed the first-instance judgment, but the appellate court likewise upheld the first-instance judgment and dismissed the appeal.
*Article 756 of the Civil Act (Employer's Liability for Damages)
(1) A person who employs another to engage in a certain undertaking shall be liable to compensate for damage that the employee causes to a third party in the course of performing that undertaking. This shall not apply, however, where the employer has exercised due care in appointing the employee and in supervising the undertaking, or where the damage would have occurred even if due care had been exercised.
(2) A person who supervises the undertaking on behalf of the employer also bears the liability set forth in the preceding paragraph.
3. Aiding and Abetting Fraud, What Is Daeryun's Strategy?
From our analysis of the High Court judgment concerning aiding and abetting fraud, we can see that, where a person follows another's unlawful instructions and his or her awareness of the unlawfulness is clear, this constitutes gross negligence.
In this way, even if a person did not directly participate in the fraudulent conduct, that person may be punished for aiding and abetting it while being aware of it, and aiding and abetting fraud, like fraud itself, may carry a severe penalty.
In a case involving a charge of aiding and abetting fraud, rather than indiscriminately denying the charge, it is important to obtain legal assistance from the early stages of the case. This makes it possible to ascertain the precise facts and to respond effectively through a review of the applicable law.
Daeryun Law Firm LLP 🔗Criminal Group includes attorneys handling criminal matters who, drawing on extensive practical experience, analyze cases thoroughly and provide support in responding to them.
If you are facing difficulties due to a charge of aiding and abetting fraud, you are welcome to request a legal consultation with Daeryun Law Firm LLP at any time.
