Facility Head Convicted of Fraud Remained Employed as Subsidies Received... Court: "Must Return Funds to Seoul"

"Application Constituted Fraud"
However, Some Interest and Penalty Surcharges Were Reduced

A court has ruled that a corporation which continued to employ the head of a short-term care facility for people with disabilities-despite the individual having lost their qualification due to a final conviction for fraud and embezzlement-must return the wage subsidies it received from the Seoul Metropolitan Government.

According to legal sources on December 22, the 8th Administrative Division of the Seoul Administrative Court (Presiding Judge Yang Soonjoo) recently ruled in favor of part of the plaintiff's claim in a lawsuit filed by a non-profit corporation A, which operates a short-term care facility for people with disabilities in Gangseo-gu, Seoul, against the Seoul Metropolitan Government seeking to cancel the imposition of a penalty surcharge. The court canceled the portion of the order to return subsidies and the penalty surcharge that exceeded 138.69 million won, and dismissed the remainder of the claim.

The facility director, Mr. B, was sentenced to one year and six months in prison with a three-year suspended sentence for charges including fraud, embezzlement, and forgery of private documents, and the verdict became final. The Seoul Metropolitan Government determined that corporation A continued to employ Mr. B as facility director and received wage subsidies even after he lost his qualification for the role, and thus canceled the subsidy grant decision, ordered the return of the subsidies, and imposed a penalty surcharge.

Corporation A argued that the grounds and calculation basis for the disposition were unclear in the official documents, and that it had applied for the salary only because it was difficult to find a replacement, seeking cancellation of the disposition. However, the court did not recognize any procedural defects. The court stated, "It is reasonable to conclude that the plaintiff was sufficiently aware of the facts that led to this disposition, the obligation to return the subsidies, the amount to be returned, the amount of the penalty surcharge, and the basis for the calculation."

However, the court found it unlawful to order the return of 660,596 won in interest attached to part of the subsidy paid in October 2022, as the application and payment occurred before the criminal verdict became final. The court also ruled that imposing a penalty surcharge exceeding 100% for the October 2022 subsidy constituted an abuse of discretion.