Former Presidents of Seoul Gyokyo Association Acquitted in Appeal Trial on 'Unauthorized Fundraising' Charges Related to Mutual Aid Society

"Never Raised Issues During Audit"...Appellate Court Overturns First Trial's Guilty Verdict

[Asia Economy Reporter Yoo Byung-don] Former presidents of the Seoul Metropolitan Teachers' Association (Seoul Gyotong), who were prosecuted for conducting quasi-deposit activities while operating a funeral service association, were acquitted in the appellate court.

The Criminal Appeals Division 2 of the Seoul Central District Court (Presiding Judge Lee Gwan-yong) on the 24th acquitted former Seoul Gyotong presidents Lee (64) and Yoo (66), who were charged with violating the Act on the Regulation of Quasi-Deposit Activities. Contrary to the first trial, both were found not guilty. Seoul Gyotong, which was also jointly charged under the joint penalty provision, was acquitted as well.

Lee and Yoo were indicted on charges of receiving a total of approximately 27.75 billion KRW from about 16,000 Seoul Gyotong members while operating the funeral service association from October 2011 to May 2017.

The Quasi-Deposit Activities Act prohibits raising funds from an unspecified number of people without permission, registration, or notification. The prosecution considered that Seoul Gyotong’s funeral service association had engaged in quasi-deposit activities.

In the first trial, the defendants were found guilty, with Lee and Yoo each sentenced to fines, and Seoul Gyotong’s fine sentence was suspended.

However, the appellate court overturned the original ruling, stating, "It is difficult to conclude that it was proven that the defendants knowingly engaged in quasi-deposit activities without obtaining permission."

The court pointed out, "When the defendants took office as presidents, the funeral service association had already been operating for over 20 years," and added, "Seoul Gyotong regularly underwent audits by certified public accountants, and no issues regarding the lack of permission for the funeral service association were ever raised."

Furthermore, the court explained, "The Quasi-Deposit Activities Act prohibits conducting quasi-deposit activities without permission. In cases like this, where no issues were ever raised and auditors did not point out any problems, it is possible that the defendants were unaware of any illegality."

Seoul Gyotong has been operating the funeral service association since 1993 for the welfare of its members. Members pay between 10,000 and 200,000 KRW per account monthly, and upon retirement, they receive the principal plus interest at maturity as funeral service benefits.

When the fund balance became insufficient, Seoul Gyotong conducted an internal investigation in May 2017. At that time, the Financial Supervisory Service referred the case to the police, stating that the previous administration had invested the funeral service funds in high-risk areas with a risk of principal loss.

This content was produced with the assistance of AI translation services.