Tax Accountant Receives Heavy Sentence for Embezzling 5.4 Billion Won from Clients with 'Capital Gains Tax Reduction' Scam

Court Upholds 7-Year Sentence in Appeal
"Serious Breach of Trust in the Tax Accountant Profession," Says Judge

A tax accountant in his 50s, who deceived 19 clients and embezzled 5.4 billion won by falsely promising to reduce their capital gains tax, has received a heavy sentence in the appellate court following a similar verdict in the first trial.

According to Yonhap News on the 16th, the Criminal Division 3 of the Suwon High Court (Presiding Judge Kim Jonggi) upheld the original sentence in the appeal trial of Mr. A, who was indicted on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes.

Mr. A was accused of embezzling 5.4 billion won from 19 clients over six years, from December 2016 to December 2022, under the pretense of paying taxes on their behalf. He deceived clients by claiming, "The original capital gains tax is 800 million won, but I can legally reduce your tax. If you pay me 560 million won, including my fee, I will take care of the entire tax payment."

Suwon High Court building. Photo by Yonhap News

It was found that Mr. A committed these crimes after running short of investment funds while pursuing real estate development and mask manufacturing businesses. The victims reportedly only discovered that Mr. A had not paid their taxes when they were later notified by the relevant tax offices that their capital gains tax had not been reported or paid.

Court: "Serious offense that undermined trust in the profession"

The appellate court stated, "Mr. A used the embezzled funds to pay taxes for other clients, pay referral fees to victim intermediaries, invest in a corporation he established, and cover his living expenses. Given the circumstances and methods of the crime, the number of victims, and the scale of the damages, the offense is extremely serious and has undermined public trust in the tax accountant profession." The court further explained, "The victims have been burdened with not only the principal tax but also additional penalties for unreported and delayed payments. Some victims had to take out loans to pay overdue taxes, or had their assets seized due to tax arrears, resulting in actual damages that appear to exceed the amount embezzled in this case."

The court added regarding the sentencing, "The original sentence appears to have been appropriately determined after considering various circumstances reflected in the case records. There have been no fundamental changes in sentencing factors or criteria since the original ruling, and the sentence does not appear to be unjustly light or heavy."