Case Analysis / Legal Updates
Unauthorized Fund-Raising Fraud | Supreme Court Judgment Finding That Sales Commissions Received by an Investment Solicitor May Also Be Returned for the Repayment of Victims
In cases of unauthorized fund-raising fraud, a structure in which the sales personnel who solicit investment funds receive a commission at a fixed rate is commonly used.
The question is whether, when such a commission is paid in the course of an illegal solicitation of investment funds, the recipient may retain it.
In this case, the issue was whether the sales commissions paid to freelance investment solicitors after the unauthorized fund-raising company entered rehabilitation proceedings could be recovered as unjust enrichment.
The Supreme Court held that, even for a sales commission paid in the course of unauthorized fund-raising, a claim for its return may exceptionally be allowed under the principles of fairness and good faith when various circumstances are considered together, and it reversed and remanded the lower judgment. (Supreme Court, Decision of January 29, 2026, 2024 Da 292464)
1. Unauthorized Fund-Raising Fraud | Overview of the Case
In this case concerning unauthorized fund-raising fraud, the company in question solicited numerous investors under the pretext of an investment business for about seven years and raised funds amounting to hundreds of billions of won.
Sales personnel in the form of freelancers participated in the process of soliciting investors.
They operated under a structure in which they were paid a sales commission at a fixed rate when they attracted an investor.
The defendants solicited investors in this manner and received sales commissions of approximately 40 million to 50 million won from the company.
The company subsequently entered rehabilitation proceedings due to its deteriorating finances, and the trustee filed a lawsuit seeking the return of the commissions paid to the sales personnel on the ground that they constituted unjust enrichment.
Regulation of Unauthorized Fund-Raising
For the purposes of this Act, the term "unauthorized fund-raising" means an act of raising funds [including virtual assets (referring to the virtual assets under subparagraph 1 of Article 2 of the Act on the Protection of Virtual Asset Users)] from an unspecified number of persons as a business, without obtaining authorization or permission under other statutes, or without making a registration or report (including a report under Article 7 of the Act on Reporting and Using Specified Financial Transaction Information), and which falls under any of the following subparagraphs:
1. An act of receiving an investment, having promised to pay the full amount of the investment or an amount exceeding it in the future;
2. An act of receiving money under the pretext of a deposit, installment savings, an installment, a deposit for safekeeping, or the like, having promised to pay the full amount of the principal or an amount exceeding it in the future;
3. An act of issuing or selling corporate bonds, having promised to repurchase them at or above the issue price or selling price in the future;
4. An act of receiving money under the pretext of membership fees or the like, having promised to compensate for a future economic loss with money or securities.
(1) A person who engages in unauthorized fund-raising in violation of Article 3 shall be punished by imprisonment for not more than five years or by a fine not exceeding 50 million won.
(2) A person who makes a label or advertisement in violation of Article 4 shall be punished by imprisonment for not more than two years or by a fine not exceeding 20 million won.
The Act on the Regulation of Conducting Fund-Raising Business without Permission prohibits raising funds from an unspecified number of persons without authorization or permission.
This Act prohibits unauthorized fund-raising in order to protect investors and maintain a sound financial order, and a violation may be subject to criminal punishment.
The Lower Court's Determination
The lower court held that, because the sales commissions were paid in the course of an illegal solicitation of investment funds, they constituted a performance rendered for an illegal cause.
On the ground that, under Article 746 of the Civil Act, the return of a performance rendered for an illegal cause cannot be claimed, the lower court did not accept the plaintiff's claim.
2. Unauthorized Fund-Raising Fraud | The Supreme Court's Determination

The Supreme Court held that the lower court's determination applied the legal doctrine of performance rendered for an illegal cause in an excessively formalistic manner.
In particular, it determined that, in this case, the process of soliciting investments and the nature of the sales commissions had to be considered together.
The Fact That the Sales Commissions Were Paid Should Be Recognized as an Admission
The Supreme Court first held that it should be recognized that the defendants had received the sales commissions from the company.
In the course of the litigation, the defendants did not clearly dispute the fact itself that they had received the amounts from the company. Under the Civil Procedure Act, where a party does not clearly deny a fact asserted by the opposing party, this may be regarded as an admission.
Accordingly, it held that the lower court's determination that it was unclear whether the payer was the company ran counter to the principle of party presentation.
Unauthorized Fund-Raising Sales Commissions Are Profits Derived from the Victims' Investments
The Supreme Court regarded as significant the point that the actual source of the sales commissions was the investments made by the investors.
The company in this case had maintained a structure of paying sales commissions and dividends with new investment funds.
In the end, the commissions received by the sales personnel could be regarded as having come from the funds of the victims of the unauthorized fund-raising.
Even a Performance Rendered for an Illegal Cause May Exceptionally Be Subject to a Claim for Return
The Civil Act provides that the return of a performance rendered for an illegal cause cannot be claimed.
The Supreme Court, however, held that, in light of the principles of fairness and good faith, a claim for return may exceptionally be allowed.
In particular, it took into account that, in this case, the amounts recovered through the rehabilitation proceedings were to be applied to the repayment of the investment victims.
If the claim for return were not recognized, the sales personnel who participated in the process of soliciting investments would retain the profits obtained through their illegal acts, while the victims' losses would remain unremedied.
The Supreme Court held that such a result runs counter to the principle of fairness.
3. Unauthorized Fund-Raising Fraud | Summary of the Doctrine of Performance Rendered for an Illegal Cause

A performance rendered for an illegal cause is a legal doctrine provided for in Article 746 of the Civil Act.
Where a person has rendered property or provided labor for an illegal cause, the return of such benefit may not be claimed.
This shall not apply, however, where the illegal cause lies only with the beneficiary.
This provision was established with the aim of preventing courts from intervening to protect a party in a dispute arising through an illegal act.
Exceptional Situations in Which Return Is Allowed
The precedents, however, hold that a claim for return may exceptionally be allowed in the following cases.
Second, where failing to recognize the return would produce a result that runs counter to the principles of fairness and good faith.
In this case, the points that the sales commissions originated from the funds of the unauthorized fund-raising victims and that the returned amounts would be used for the repayment of the victims were important considerations.
4. Unauthorized Fund-Raising Fraud | Practical Points
In cases of unauthorized fund-raising fraud, the legal liability of the persons who participated in the process of soliciting investments is an important issue.
In particular, even if the sales personnel who solicited investors claim to be mere intermediaries, it is difficult for them to be free from legal liability.
Legal Liability of Solicitors in Unauthorized Fund-Raising Investments
In an unauthorized fund-raising investment structure, solicitors, brokers, freelance sales personnel, and others are often involved in the process of attracting investments.
Because they are paid a fixed commission based on their performance in soliciting investment funds, they may be assessed as having substantially contributed to the illegal investment structure.
The Possibility of a Lawsuit to Recover Sales Commissions
This judgment is significant in that it showed that, in cases of unauthorized fund-raising fraud, the sales commissions paid to investment solicitors may also be subject to return.
In particular, where rehabilitation proceedings or bankruptcy proceedings are underway, such recovery lawsuits may be filed in order to secure the funds for the repayment of victims.
Accordingly, those who are involved in the process of soliciting investments need to bear in mind that legal liability may arise even from what is merely sales activity.
Assistance from Daeryun Law Firm
When you seek advice from Daeryun Law Firm, a corporate attorney closely reviews the investment structure and the flow of funds and comprehensively analyzes matters such as whether unjust enrichment is established, the scope of any liability for return, and the possibility of joint liability.
In addition, where a recovery lawsuit linked to rehabilitation proceedings or bankruptcy proceedings is underway, the firm can assist in organizing the facts with a focus on the financial transaction records, the investment structure, and the circumstances of the sales commission payments, so that a systematic litigation response strategy can be prepared.
If you need assistance with a related matter, you are welcome to arrange a consultation through the corporate attorney legal consultation booking with Daeryun.
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