Suwon District Court Sentences 4 Years Imprisonment for Fraud Charges
Previously Received Two Suspended Sentences for Similar Crimes
A man in his 50s who deceived a new commercial building construction company by pretending to normally open a restaurant franchise he operated in the newly built shopping complex was sentenced to prison for embezzling about 1.9 billion KRW in interior support funds.
The Suwon District Court Criminal Division 11 (Presiding Judge Shin Jin-woo) sentenced Mr. A, who was indicted on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, to four years in prison, Yonhap News reported on the 3rd.
Mr. A, the representative of the franchise company, was tried on charges of embezzling about 1.9 billion KRW in interior support funds from the developer at the sales office of the commercial complex in Eungye District, Siheung-si, Gyeonggi Province, from August 2020 to August 2021. He claimed that he operated 90 B franchise branches and had 300 stores scheduled to open, and promised to lease 50 units on the 1st to 3rd floors of the complex to franchise-related businesses, maintaining the lease contract for five years. Believing this, the developer provided Mr. A with the interior support funds. However, Mr. A only opened stores in some of the 50 contracted units, and even those that opened reportedly closed within a few months.
Regarding this, Mr. A denied the charges, stating, "I opened a total of 10 stores including restaurants and billiard halls on the 1st to 3rd floors of the complex, but due to COVID-19, operations became difficult and I closed early," and "I had no intention or inability to operate normally." He also claimed that all the interior support funds received from the developer were spent on the complex. However, the court found no evidence that Mr. A tried to continue operations by reducing the number of stores, and considering various evidence, it was difficult to believe that he had the intention or ability to properly open B franchise-related stores in the complex. The court also pointed out that Mr. A failed to submit specific expenditure details or objective documents such as receipts to support the use of the interior support funds.
The court stated, "The defendant has a history of two suspended sentences for similar crimes and committed this offense again," and "He has not been forgiven by the victim company, nor has the damage been restored." Regarding sentencing, the court explained, "Nevertheless, the defendant consistently denied the crime with unacceptable excuses and did not reflect on his wrongdoing, making severe punishment commensurate with the guilt inevitable."
Furthermore, the court added, "However, the victim company, as the developer, also bears responsibility for the damage as it failed to thoroughly verify the actual status of the defendant’s operating company while trying to quickly conclude the sales contract and gain profit," and "Since the defendant signed the lease contract and promoted it, successfully completing the commercial complex sales, it is difficult to consider the actual damage as significant, which was taken into account as a favorable factor for the defendant."
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