[Violation of the Act on the Aggravated Punishment of Specific Economic Crimes (Fraud)] Loan from Public Guarantee Institution Case, Defended with Suspended Indictment at the Prosecution Stage

The underlying facts—signatures, transfers, and the delivery of documents—could not be denied. Where the gain exceeds KRW 500 million, the case is no longer subject to ordinary fraud provisions but instead to the Act on the Aggravated Punishment of Specific Economic Crimes, under which the statutory penalty is aggravated to imprisonment of three years or more.

If indicted, the clients had to be prepared for actual imprisonment even as first-time offenders.

Immediately after the loans were executed, the broker had the clients transfer the loan proceeds to accounts he designated, claiming this was procedurally necessary. He promised to return the funds whenever needed, but returned only part of the money, delayed repeated demands, and then became unreachable. The clients were themselves victims who had lost as much as hundreds of millions of won.

As soon as LEAP took on the case, it built its defense strategy around the core argument that the clients could not be held liable as co-principals of fraud.

① Restored the message records and reconstructed the entire case in chronological order. LEAP recovered the message exchanges between the clients and the broker. From the first consultation with the broker, through the guarantee application and loan execution, to the subsequent movement of funds, everything was arranged line by line in chronological sequence.

② Established that there could have been no shared intent to jointly commit the crime. LEAP emphasized that the clients could not have had the intent to jointly carry out fraud by using another person's conduct to execute their own fraudulent scheme.

③ Argued that functional control over the act could not be recognized. LEAP relied on Supreme Court precedent holding that establishing co-principal liability requires more than mere conspiracy—it requires an essential contribution to the crime. Applying that standard, LEAP broke down the acts of execution item by item.

④ Proved with evidence that there was no intent to defraud. LEAP traced the full use of the loan proceeds. It demonstrated with objective materials that the entire amount had been used for its intended purpose—opening and operating the clinics.

⑤ Highlighted the clients' status as victims as well. LEAP organized, point by point, the circumstances in which the clients transferred the loan proceeds to the broker and never recovered as much as hundreds of millions of won, and how the broker became unreachable despite repeated demands for repayment. LEAP impressed upon the investigative authorities that the clients were not the perpetrators of deception but were, in fact, the ones exploited and financially harmed by the broker.

Where the gain from fraud exceeds KRW 500 million, the Act on the Aggravated Punishment of Specific Economic Crimes applies and the statutory penalty is significantly aggravated.

The more a case involves public funds, the more likely investigative authorities are to view the offense as serious, often leading to actual imprisonment.

In cases involving a broker, such as opening consulting or loan arrangement services, it is common for a person who merely entrusted procedural matters to be charged as a co-principal on equal footing with the main offender, simply because they were the named party. Unless it is determined who actually planned and carried out the crime, and the boundary between co-principal and aiding-and-abetting liability is contested on legal grounds, the outcome can be entirely different.

In this case, LEAP achieved the best possible outcome—a Suspended Indictment—through a differentiated strategy and response. Since the outcome can change entirely depending on who handles the case and how from the early stages, we recommend seeking the assistance of LEAP attorneys, who have proven expertise and a strong track record of success in similar cases.