One-Person Company CEO Embezzles 1.46 Billion Won in Corporate Funds... Receives Suspended Prison Sentence

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The court has sentenced the head of a one-person company, who was indicted on charges of embezzling funds from his own company, to a suspended prison term.

According to the legal community on April 19, the Busan District Court Criminal Division 7 (Presiding Judge Lim Ju-hyeok) sentenced a man in his 50s, surnamed Kim, to two years in prison with three years of probation for violating the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement), among other charges.

Kim was accused of embezzling approximately 1.46 billion won by transferring company funds to his personal account between June 2021 and December 2022 while operating three companies in which he was the sole shareholder. During this process, he also issued false electronic tax invoices to make it appear as if there were actual transactions between the companies.

Investigations found that the embezzled funds were used for his personal living expenses or were partially lent to acquaintances. In court, Kim argued that flexible use of funds during business operations is common practice and that the company suffered no losses. However, the court did not accept this argument.

The Supreme Court has already stated, "Even in a one-person company, the company and the shareholder are separate legal entities, and company property cannot be considered the shareholder's property."

The court stated, "It is difficult to conclude that there was no damage or that the damage was minor in this case." However, the court explained its reasoning for sentencing by noting, "There are differences from typical embezzlement or breach of trust cases, considering the defendant was essentially the sole shareholder and commingled corporate and personal assets."

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