Case Type: Real Estate Fraud / Loan Fraud 

Result: Non-Prosecution (Cleared of Charges) 

Case Details: 

1. Case Overview 

The client participated as an execution management company for a large-scale real estate development project but faced economic hardships due to unexpected project delays. Despite contributing personal assets to sustain the business, the client eventually entered individual rehabilitation proceedings. However, during these proceedings, creditors who had loaned initial business funds filed a criminal complaint against the client for fraud. Although failure to repay debt (civil default) does not automatically constitute criminal fraud, the complainants pressured the client solely based on the unrecovered funds.

2. Key Issues 

The establishment of fraud in loan cases depends on the existence of repayment ability and intent at the time of borrowing. If the borrower had genuine business intent and repayment capacity at the time of borrowing, but failed to repay due to subsequent unavoidable circumstances, it constitutes a civil default rather than criminal fraud. Particularly in real estate development disputes, whether the project was actually carried out serves as the key benchmark for determining fraudulent intent.

3. Defense Strategy 

Defense counsel thoroughly reviewed project documents and established three key defense arguments. First, counsel proved that the project was actively underway when funds were borrowed, with licensing procedures and PF loan efforts continuing thereafter. Second, counsel established through records that creditors provided funds while fully aware of business risks, expecting economic benefits such as securing subcontracting work rather than simple interest income. Third, counsel submitted property tax records and real estate registries demonstrating that the client held sufficient personal assets to cover debts if delayed, proving the absence of fraudulent intent.

4. Legal Principles & Case Outcome 

To address police suspicion regarding individual rehabilitation, defense counsel argued the Supreme Court precedent (2007Do10770): "Determining loan fraud for debts discharged through bankruptcy or rehabilitation requires prudent judgment, as it may undermine the debtor's willingness to achieve economic recovery." After reviewing the legal briefs and objective evidence, the investigative authority concluded there was insufficient evidence of fraudulent intent at the time of borrowing and issued a decision of Non-Prosecution (Cleared of Charges).

Case Inquiry: Attorney Bak Sung uk