Establishment of the Crime of Fraud | Supreme Court Judgment Holding That the Crime of Fraud Is Not Established in a Non-Face-to-Face Card Loan

This is a case in which the establishment of the crime of fraud was at issue.

Through a credit card company application installed on his mobile phone, the defendant applied for a card loan on the following terms: a loan amount of 18,500,000 won, an annual interest rate of 18.5 percent, and a loan period of 27 months.

The problem was that the defendant intended to obtain loans totaling 136.1 million won simultaneously from multiple card companies, taking advantage of the fact that loan information is not shared among them when card loans are obtained simultaneously on the same day.

The defendant was in such a poor financial condition that he carried out the conduct described above.

The payments owed to his business counterparts and his private debts amounted to approximately 200 million won, and his debts to acquaintances also approached approximately 100 million won.

In other words, the defendant had no intention or ability whatsoever to repay normally the loan proceeds of approximately 130 million won.

Nevertheless, the defendant obtained loan proceeds of approximately 130 million won from the card companies.

Accordingly, the defendant was indicted for the crime of fraud, on the ground that he deceived the card companies by applying for loans through a non-face-to-face automated review process despite having no intention or ability to repay the loan proceeds normally.

As to whether the crime of fraud was established, the lower court found the defendant guilty.

It held that the crime of fraud was established against the defendant, on the premise that the conduct described above constituted a deceptive act against the card companies.

As to whether the crime of fraud was established, the Supreme Court reversed the determination of the lower court and held that the crime of fraud was not established.

The Supreme Court focused on the fact that this was a financial transaction conducted through a non-face-to-face automated review process in which no person was involved.

The defendant entered, through the card companies' applications, information such as the purpose of the funds, his assets, his annual income, his liabilities, his fixed expenditures relative to his annual income, and his credit score, and, on that basis, the loans were processed automatically by the computer system, and the loan proceeds were remitted.

The Supreme Court determined that, in the course of processing those loan applications, it could not be found that the card companies' employees were involved by, for example, verifying the loan applications or remitting the loan proceeds.

For the crime of fraud to be established, a 'deceptive act against a person' must be present.

The Supreme Court took the view that, because the process was carried out as a non-face-to-face automated loan process, no employee (a person) of the card companies was involved, and a deceptive act against a person was not established.

The Supreme Court held that the defendant's conduct did not establish the crime of fraud, and it reversed and remanded the determination of the lower court.

This was a Supreme Court judgment holding that, as to whether an act of deception establishing the crime of fraud exists, the crime cannot be established where the object is not a 'person.'

The relevant legal principle on which the Supreme Court based this judgment is as follows.