Daycare Center That Siphoned Off More Than 100 Million Won in Subsidies and Threatened Parents: Court Says "Closure and Name Disclosure Justified"

[Financial News] A court has ruled that the Gangdong-gu Office was justified in ordering the closure of a daycare center and publishing its information after the facility falsely registered childcare staff and children, siphoned off more than 100 million won in government subsidies, and manipulated attendance records. The court also found that the enforcement measures and procedures were lawful, citing evidence that the daycare center's operator attempted to persuade parents and sent threatening text messages.
According to legal sources on the 5th, the Eighth Administrative Division of the Seoul Administrative Court, presided over by Yang Soon-joo, dismissed all claims in a lawsuit filed by the daycare center's representative and actual operator against the head of Gangdong-gu Office. The plaintiffs had sought to cancel the order to publish the daycare center's information, the closure order, and other measures.
In the second half of 2004, Hanam City Hall in Gyeonggi Province received a complaint that infants and toddlers attending daycare centers within its jurisdiction were also registered at a daycare center in Gangdong District, Seoul. Gangdong-gu Office investigated the facility's operations over a total of 24 months from 2022 to 2024 and uncovered large-scale fraudulent receipt of subsidies.
The investigation found that the daycare center falsely registered the names of six staff members and received approximately 98 million won in labor costs and allowances. It also made it appear that one childcare assistant had concurrently worked as a cook, obtaining approximately 49 million won over 55 months. In addition, the facility received approximately 20 million won in extended childcare fees and meal and snack expenses by falsely registering children and falsifying attendance records. The total amount of improperly received subsidies came to approximately 118.09 million won.
The investigation also revealed that the facility assigned an unqualified person to serve as a homeroom teacher for infants and toddlers and failed to properly manage accounting documents, including receipts, and childcare logs.
In December 2024, Gangdong-gu Office ordered the facility's closure, demanded the recovery of the improperly received subsidies, imposed an administrative penalty surcharge of approximately 590 million won, and revoked the director's qualification. In January 2025, it also decided to publish the daycare center's name and address, along with the director's name, online for three years.
The plaintiffs filed the lawsuit, citing the omission of advance notice of the administrative investigation, procedural violations in the investigation of third parties including parents, a coercive investigation, and procedural defects in the publication order.
The court ruled that all of the district office's measures were lawful. It stated, "Because this was a case in which advance notice posed a high risk of evidence being destroyed, oral notice was properly given at the scene," and found no procedural defects.
The court also pointed to evidence of concealment that emerged during the investigation of the parents. It ruled, "It is recognized that the actual operator offered parents money if they agreed to false registrations, and that after the investigation, the operator sent parents text messages intended as threats and made calls with the caller ID blocked." The court added, "There were circumstances in which advance notice could have led to the destruction of evidence, reversals of statements, or harm to the parents."
Regarding the three-year publication order, the court stated, "Under the Infant Nursing and Care Act, when a daycare center subject to a facility closure order has received more than the threshold amount of 3 million won through false or fraudulent means, the competent district head must publish its information." It added, "In light of the seriousness of the violations and the public interest in promoting the welfare of infants and toddlers, the measure did not constitute an abuse or overreach of discretionary power."
[email protected] Lee Chang-hoon Reporter