CEO of Gwangdeokanjeong, Convicted of Fraudulent Loans Worth Over 20 Billion Won, Sentenced to Four Years Again on Appeal... "Victims Harmed by Distorting the System"

[Financial News] The CEO and an executive of the clinic network company Gwangdeokanjeong were again given prison sentences on appeal over allegations that they secured fraudulent loans worth more than 20 billion won.
Criminal Division 13 of the Seoul High Court (Presiding Judges Kim Mu-shin, Lee Woo-hee and Yoo Dong-gyun) sentenced Gwangdeokanjeong CEO Joo and executive Park to four years and three years in prison, respectively, on the 24th, upholding the lower court ruling on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes.
However, the court did not order their immediate detention in the courtroom, saying that it was difficult to conclude there was a risk of evidence destruction or flight at this stage.
Among the franchise clinic directors who were also brought to trial, 14 defendants who went through the appellate proceedings received suspended prison sentences, as in the first trial.
As in the first trial, the appeals court found Joo and Park guilty of arranging temporary transfers of Gwangdeokanjeong funds to prospective clinic owners so they could obtain bank balance certificates showing large deposits, and then using those documents to secure guarantee certificates from Korea Credit Guarantee Fund (KODIT).
The bench said, "Joo and Park's actions ultimately amounted to deception against KODIT, and KODIT issued the guarantee certificates because of that deception." It added, "The defendants also had intent to commit fraud and the intent to unlawfully gain control over property."
In explaining the sentences for the main defendants, the court criticized them, saying, "This crime distorted KODIT's pre-startup guarantee program, caused harm to many innocent prospective entrepreneurs, and undermined public trust in medical professionals, who serve a public function, and in the proper conduct of their work."
Joo is accused of obtaining KODIT guarantee certificates worth a total of 25.9 billion won in 35 separate cases between August 2020 and February 2023 by falsely inflating deposit balances and passing them off as the personal funds of doctors and dentists opening clinics.
Park was found to have helped deceive KODIT staff and facilitate the issuance of the guarantee certificates during roughly the same period by recruiting doctors and dentists and temporarily moving corporate funds in and out of accounts.
KODIT issues "pre-startup guarantee" certificates that allow loans of up to 1 billion won to prospective entrepreneurs with professional licenses, including doctors of Korean medicine.
To receive a large guarantee certificate, applicants must exceed certain thresholds for their own funds, required capital and business viability scores.
Doctors of Korean medicine at the branches were investigated for obtaining false balance certificates using temporary loans from Gwangdeokanjeong, returning the money to the company, and then submitting the balance certificates to KODIT as proof of their "own funds."
Gwangdeokanjeong was founded in 2017 and once operated more than 40 franchise Korean medicine clinics and hospitals nationwide. CEO Joo is the son of Democratic Party of Korea lawmaker Joo Cheol-hyeon.
[email protected] Reporter Jung Kyung-soo Reporter