Supreme Court: Money Collected for Illegal Acts Used to Repay Personal Debt... Not 'Embezzlement Crime'

Court: "Entrusted relationship formed by crime is not based on trust to protect embezzlement charge"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has made its first ruling that if money collected by several people for illegal activities is used for personal purposes, the person who used the money cannot be punished for 'embezzlement.'

The entrusted relationship formed through the execution or preparation of a crime is not based on trust worthy of protection under embezzlement charges.

The Supreme Court's 3rd Division (Presiding Justice Kim Jae-hyung) announced on the 20th that it overturned the original sentence of six months imprisonment in the appeal trial of A (51), who was charged with embezzlement, and remanded the case to the Busan District Court.

In January 2013, A, despite lacking the qualifications to open a medical institution, formed a medical consumer cooperative with two victims and agreed to operate a nursing hospital, receiving an investment of 250 million won from the two individuals.

While proceeding with the member recruitment process for establishing the cooperative and scouting for hospital sites, conflicts arose between A and the victims, leading the victims to stop providing the agreed additional investment funds, and the project was halted.

The problem arose when A did not return the investment funds to the two individuals and used 230 million won of the investment money to repay personal debts.

The first trial recognized all of A's embezzlement charges as guilty and sentenced him to one year in prison. However, the second trial partially dismissed the charges related to 220 million won received from one of the two victims, who had been acquitted, and only found the remaining embezzlement charges guilty, reducing the sentence to six months imprisonment.

However, the Supreme Court ruled that even the embezzlement charges deemed guilty by the second trial were not guilty. According to previous precedents, for embezzlement to be established, there must be an entrusted relationship based on trust between the 'custodian' and the 'owner,' and whether this entrusted relationship is worthy of protection under criminal law must be normatively judged depending on the case.

However, in this trial, the Supreme Court took a stricter view of the requirements for establishing embezzlement, stating, "From a normative perspective, an entrusted relationship formed through the execution or preparation of a crime should not be considered based on trust worthy of protection under embezzlement charges."

Although the fact that the investment was made constitutes a violation of the Medical Service Act does not mean that the victims cannot claim civil restitution due to illegal cause of payment, it does not necessarily mean that the victims' civil restitution claims automatically correspond to an entrusted relationship worthy of criminal protection.

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