Embezzlement Punishment | Analysis of a Judgment on Clear Standards for the Confiscation and Collection of Corruption Property

■ 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.

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.

Act on Special Cases concerning the Confiscation and Recovery of Corruption Property
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.

“Under criminal law, the collection of equivalent value, which substitutes for confiscation, is a supplementary disposition pronounced in a judgment of conviction against a defendant standing criminal trial on the charged facts, and it has the character of a penalty.” (See Supreme Court, Decision of November 9, 2006, 2006 Do 4888; Supreme Court, Decision of July 28, 2022, 2019 Du 63447)