Company fund embezzlement employee prosecution agency case, Law firm Veat’s strategic approach

Recently, Law firm Veat received a request from a client who had discovered that a financial management employee had misappropriated approximately 700 million won of the firm’s funds for personal use and proceeded with legal action against the employee.

The employee had used the company’s corporate card for personal travel and luxury purchases over a period of more than a year, illegally using company funds. The client discovered this fact during regular corporate card usage reviews and immediately fired the employee and entrusted Law firm Veat to handle the prosecution of the employee.

What laws could the employee’s misappropriation of company funds violate?

◾ Criminal Code
Article 355 (Embezzlement and Breach of Trust) ① A person who has possession of another’s property and embezzles it or refuses its return shall be sentenced to imprisonment for not more than five years or a fine of not more than 150 million won.
② A person who handles another’s affairs and gains property or causes a third party to gain it by an act contrary to his duty, thereby causing damage to the principal, shall be subject to the same punishment as in the previous paragraph.

Article 356 (Embezzlement and Breach of Trust in Office) A person who commits an offense under Article 355 of the Criminal Code in the course of his or her duties shall be sentenced to imprisonment for not more than ten years or a fine of not more than 30 million won.
According to the Criminal Code, if a person who has possession of another’s property embezzles it or refuses its return (embezzlement), or if a person who handles another’s affairs gains property or causes a third party to gain it by an act contrary to his duty, thereby causing damage to the principal (breach of trust), they shall be sentenced to imprisonment for not more than five years or a fine of not more than 150 million won (same law, Article 355, paragraphs 1 and 2).

Furthermore, it can be confirmed that if such embezzlement or breach of trust is committed contrary to one’s duties, a more severe punishment is imposed with imprisonment for not more than ten years or a fine of not more than 30 million won (same law, Article 356).

Law firm Veat, based on a deep understanding of the aforementioned Criminal Code regulations, carefully reviewed whether the employee who misappropriated the client's funds was deemed to be a person in possession of the client’s property or a person handling the client’s affairs, and whether the crimes of embezzlement or breach of trust under the Criminal Code were established.

◾ Special Act on Punishment of Specific Economic Crimes (hereinafter "Specific Economic Crimes Act")
Article 3 (Aggravated Punishment for Specific Property Crimes) ① A person who commits an offense under Article 347 (Fraud), Article 347-2 (Computer Fraud), Article 350 (Extortion), Article 350-2 (Special Extortion), Article 351 (applies only to habitual offenders under Article 347, 347-2, 350, and 350-2), Article 355 (Embezzlement and Breach of Trust), or Article 356 (Embezzlement and Breach of Trust in Office) shall be subject to aggravated punishment if the amount of property or property benefit obtained by the offense or caused to be obtained by a third party (hereinafter “benefit amount” as defined in this Article) is 500 million won or more, according to the following classifications:
1. If the benefit amount is 50 billion won or more: imprisonment for life or imprisonment for more than five years
2. If the benefit amount is 500 million won or more but less than 50 billion won: imprisonment with work for more than three years
According to the Special Act on Punishment of Specific Economic Crimes, if a person commits embezzlement or breach of trust or office embezzlement or breach of trust, and the amount of property or property benefit obtained by the offense or caused to be obtained by a third party is 500 million won or more, they shall be subject to aggravated punishment (same law, Article 3, paragraph 1).

Law firm Veat, based on an accurate understanding of the aforementioned regulations and related legal principles, conducted a review to determine whether the employee’s misappropriation of company funds was subject to aggravated punishment under Article 3, paragraph 1, of the Special Act on Punishment of Specific Economic Crimes, based on thorough evidence gathering.

Law firm Veat’s Response Strategy

Law firm Veat focused on thorough evidence collection and record management from the outset of the case. In particular, they secured the company’s corporate card usage history, as well as the employee’s confession and related records, to lay the groundwork for proving the charges of embezzlement.