'Family-named Stocks' Gangdong-gu Office Official... Reason for Omission of Violation of the Financial Real Name Act

A public official from Gangdong District Office, Kim, is accused of embezzling 11.5 billion won in public funds.
[Image source=Yonhap News]

[Asia Economy Reporter Cho Sung-pil] Kim Mo (47), a public official at Gangdong District Office accused of embezzling 11.5 billion KRW of public funds, was found to have invested the embezzled money in stocks using accounts under his family members' names, according to police investigation results. This means he used nominee accounts, but the police did not apply charges for violating the Real Name Financial Transactions Act when transferring Kim to the prosecution. The police explained that violation of the Real Name Financial Transactions Act falls under a so-called 'purpose crime.'

According to the police on the 5th, the Seoul Gangdong Police Station applied five charges against Kim when transferring him to the prosecution on the 3rd: embezzlement in the course of duty under the Act on the Aggravated Punishment of Specific Crimes, forgery of official documents, use of forged official documents, and false preparation and use of official documents. Charges for violating the Real Name Financial Transactions Act were not applied. A police official stated, "Charges can only be applied if it falls under Article 3, Paragraph 3 of the Real Name Financial Transactions Act." The current Article 3, Paragraph 3 of the Real Name Financial Transactions Act stipulates that "financial transactions using another person's real name for the purpose of evading the law are prohibited." The police judged that Kim's use of family members' names for stock investments to cover losses was difficult to consider as an 'evasive act.'

Experts also explained that if Kim had deposited money into family members' accounts with the purpose of hiding embezzled funds or tax evasion, charges for violating the Real Name Financial Transactions Act could have been applied. Attorney Jang Joon-sung (Law Firm How) said, "Looking at court precedents, the Real Name Financial Transactions Act aims to prevent abuse such as concealment of criminal proceeds, creation of slush funds, tax evasion, and money laundering," adding, "The use of nominee accounts must be for such abusive purposes for the violation of the Real Name Financial Transactions Act to be established."

Kim is accused of embezzling 11.5 billion KRW in waste disposal facility installation contributions that Seoul Housing and Communities Corporation (SH) deposited to Gangdong District Office, over about 230 times from December 2019 to around February last year. It is understood that he embezzled public funds to repay personal debts incurred from stock investments. Kim reportedly stated to the police, "I repaid debts with public funds and then intended to generate profits through stocks to restore the public funds to their original state."

Investigations revealed that Kim used family members' accounts during the stock investment process. The family members reportedly did not know about the crime because Kim had turned off all account notification settings so they could not track the inflow and outflow of money. Kim engaged in stock 'margin trading,' buying stocks on credit by paying only part of the collateral, and it is understood that he lost most of the 7.7 billion KRW invested in stocks out of the 11.5 billion KRW embezzled.

The police applied for seizure and confiscation preservation before indictment yesterday to recover the public funds lost in stocks. Approximately 570 million KRW worth of balances in Kim's accounts and some real estate are subject to this. The police plan to identify additional assets and apply for a second seizure and confiscation preservation before indictment.

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