"That Man Is a Proxy Owner": Sentenced to 8 Years for Trying to Swallow a 4 Billion Won Supermarket

[Financial News, Ulsan = Reporter Choi Soo-sang] The Criminal Division 11 of the Ulsan District Court, presided over by Chief Judge Park Dong-gyu, said on the 1st that it had sentenced a man in his 60s, identified as A, to eight years in prison, and a man in his 50s, identified as B, to two years in prison with a three-year suspended sentence.
The siblings had been tried on charges including breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes and fraud. After a wealthy man lent them his name to open and run four food supply supermarkets worth about 4 billion won, they disposed of three of them as they pleased a year later and embezzled about 1.07 billion won.
At trial, they claimed they were not guilty, saying they had secured investment to open the supermarkets and had actually operated them. However, the pledge they signed when lending their names, along with testimony from supermarket employees, worked against them.
The victim, a wealthy man identified as C, had operated nearly 60 restaurants in the Busan and Ulsan areas for about 20 years before selling them all and holding a large amount of cash. When he found himself in a situation where he had to run new food supply supermarkets under someone else's name because of personal circumstances, he asked A and B, whom he had learned about through an acquaintance, to lend their names. The siblings agreed to open the supermarkets under their own names.
At the time, C agreed to pay the siblings a monthly fee for lending their names and drew up a pledge stating that he could take back the names whenever he wanted.
Accordingly, C gave the siblings more than 4 billion won and had them establish a total of four food supply supermarkets in Ulsan and Yangsan in 2018, then entrusted them with the day-to-day operations. In effect, A and B became the proxy owners. A then regularly reported the operating status to C.
But A secretly disposed of three food supply supermarkets without C's knowledge and pocketed about 1.07 billion won. He also diverted 480 million won that C had provided to open new store locations.
The wrongdoing came to light when the wealthy man C demanded a transfer of the names from A and B a year later, only to be refused.
During the trial, A argued that C was merely an investor who provided business funds and that he was the actual owner, so he had done nothing wrong. The court, however, found the siblings guilty, citing the pledge and the fact that most supermarket employees believed C was the real owner.
The court said, "The defendants were blinded by financial gain, betrayed the victim who trusted them, and committed the crimes," adding, "No compensation has been made, and the victim is calling for severe punishment," as the reason for the sentence.
A was also tried on charges of borrowing about 330 million won from acquaintances under the pretense of funding a real estate business and failing to repay it.
[email protected] Choi Soo-sang Reporter