Atlas Legal published detailed commentary on a matter in which the firm successfully established that the actual loss in a breach of fiduciary duty case was KRW 100 million — not the KRW 700 Million stated in the criminal complaint — thereby keeping the client eligible for a suspended sentence.
Case Overview
Client Y was the subject of a criminal complaint filed by Company X alleging breach of fiduciary duty under South Korea’s Act on the Aggravated Punishment of Specific Economic Crimes (the “Aggravated Punishment Act”). The complaint characterized the entire amount paid to Y as the loss, placing the figure at approximately KRW 700 Million. Had that figure been accepted, the Aggravated Punishment Act would have applied, carrying a mandatory minimum of three years’ imprisonment with no possibility of a suspended sentence.
The Core Legal Principle: Loss Equals the Excess, Not the Total
Under South Korean law, the loss in a breach of fiduciary duty case is not the total amount paid — it is the difference between what was paid and what would have been fair. The Supreme Court of Korea has consistently held that loss must be assessed from an economic standpoint rather than a purely legal one (Supreme Court Decision 2004Do5742, March 15, 2007). In inflated service contract cases specifically, the loss is the contract price minus the fair contract price — not the gross amount (Supreme Court Decision 99Do883, April 27, 1999).
The KRW 500 Million Threshold Under the Aggravated Punishment Act
Article 3(1) of the Aggravated Punishment Act imposes a mandatory minimum of three years’ imprisonment where the gain is KRW 500 million or more — making a suspended sentence legally impossible regardless of mitigating circumstances. Below that threshold, ordinary breach of fiduciary duty under the Criminal Act applies (up to five years’ imprisonment or a fine up to KRW 15 million), and the court retains full sentencing discretion. The Supreme Court has confirmed that the “amount of gain” under the Aggravated Punishment Act refers to the actual, substantive gain — not a gross or nominal figure (Supreme Court Decision 95Do825, June 30, 1995).
Defense Strategy: Establishing the Actual Loss at the Investigation Stage
The Atlas Legal defense team challenged the complainant’s loss figure directly from the outset of the prosecutorial inquiry. Contracts, records of services performed, market pricing data, and transaction histories were gathered and submitted to prosecutors to demonstrate with specific figures the fair value of the services Y had actually provided. Challenging the loss calculation during the investigation — rather than waiting until trial — is critical: prosecutors determine which statute to charge based on the gain figure, and an aggravated indictment is far more difficult to overcome at the trial stage.
Outcome
Prosecutors indicted Y under the ordinary breach of fiduciary duty provision of the Criminal Act — not the Aggravated Punishment Act. The gain recognized at indictment was approximately KRW 100 million, compared to the KRW 700 Million alleged in the complaint — a reduction of KRW 900 million. By falling below the KRW 500 million threshold, the client retained eligibility for a suspended sentence.
Legal Expertise
Atlas Legal’s white-collar criminal defense practice focuses on corporate crime, corporate disputes, and corporate advisory work. In breach of fiduciary duty cases, loss calculation is not a mere arithmetic exercise — it determines which statute applies and whether a suspended sentence is available. Atlas Legal works to establish the actual economic loss with specific evidence from the earliest stage of an investigation.
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Breach of Fiduciary Duty Loss Calculation: Defending Against Aggravated Charges in South Korea
Atlas Legal published detailed commentary on a matter in which the firm successfully established that the actual loss in a breach of fiduciary duty case was KRW 100 million — not the KRW 700 Million stated in the criminal complaint — thereby keeping the client eligible for a suspended sentence.
Case Overview
Client Y was the subject of a criminal complaint filed by Company X alleging breach of fiduciary duty under South Korea’s Act on the Aggravated Punishment of Specific Economic Crimes (the “Aggravated Punishment Act”). The complaint characterized the entire amount paid to Y as the loss, placing the figure at approximately KRW 700 Million. Had that figure been accepted, the Aggravated Punishment Act would have applied, carrying a mandatory minimum of three years’ imprisonment with no possibility of a suspended sentence.
The Core Legal Principle: Loss Equals the Excess, Not the Total
Under South Korean law, the loss in a breach of fiduciary duty case is not the total amount paid — it is the difference between what was paid and what would have been fair. The Supreme Court of Korea has consistently held that loss must be assessed from an economic standpoint rather than a purely legal one (Supreme Court Decision 2004Do5742, March 15, 2007). In inflated service contract cases specifically, the loss is the contract price minus the fair contract price — not the gross amount (Supreme Court Decision 99Do883, April 27, 1999).
The KRW 500 Million Threshold Under the Aggravated Punishment Act
Article 3(1) of the Aggravated Punishment Act imposes a mandatory minimum of three years’ imprisonment where the gain is KRW 500 million or more — making a suspended sentence legally impossible regardless of mitigating circumstances. Below that threshold, ordinary breach of fiduciary duty under the Criminal Act applies (up to five years’ imprisonment or a fine up to KRW 15 million), and the court retains full sentencing discretion. The Supreme Court has confirmed that the “amount of gain” under the Aggravated Punishment Act refers to the actual, substantive gain — not a gross or nominal figure (Supreme Court Decision 95Do825, June 30, 1995).
Defense Strategy: Establishing the Actual Loss at the Investigation Stage
The Atlas Legal defense team challenged the complainant’s loss figure directly from the outset of the prosecutorial inquiry. Contracts, records of services performed, market pricing data, and transaction histories were gathered and submitted to prosecutors to demonstrate with specific figures the fair value of the services Y had actually provided. Challenging the loss calculation during the investigation — rather than waiting until trial — is critical: prosecutors determine which statute to charge based on the gain figure, and an aggravated indictment is far more difficult to overcome at the trial stage.
Outcome
Prosecutors indicted Y under the ordinary breach of fiduciary duty provision of the Criminal Act — not the Aggravated Punishment Act. The gain recognized at indictment was approximately KRW 100 million, compared to the KRW 700 Million alleged in the complaint — a reduction of KRW 900 million. By falling below the KRW 500 million threshold, the client retained eligibility for a suspended sentence.
Legal Expertise
Atlas Legal’s white-collar criminal defense practice focuses on corporate crime, corporate disputes, and corporate advisory work. In breach of fiduciary duty cases, loss calculation is not a mere arithmetic exercise — it determines which statute applies and whether a suspended sentence is available. Atlas Legal works to establish the actual economic loss with specific evidence from the earliest stage of an investigation.
Click here for detailed information