In a retrial after remand on the forfeiture order for a former BNK Kyongnam Bank employee who received a final Supreme Court sentence of 35 years in prison for embezzling company funds totaling in the 300 billion won range, the forfeiture amount was sharply reduced. The change reflected the Supreme Court's view that the rise in market prices of gold bullion already seized by prosecutors must be reflected in the forfeiture.
The Seoul High Court's Criminal Division 13 (Chief Judge Baek Kang-jin) on the 22nd ordered former BNK Kyongnam Bank Investment Finance Director General Lee to forfeit 4,979.25 million won on charges including embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes. The amount was reduced by about 10.9 billion won from the more than 15.9 billion won set by the lower court before the Supreme Court's remand.
Forfeiture is money the state recovers from profits obtained through crime, calculated by excluding the value of items already seized from criminal revenue or criminal revenue that cannot be seized because it was diverted to a third party. The key issue in this case was at what point in time to calculate the value of the seized gold bullion.
Lee is accused of starting by diverting 5 billion won from a PF (project financing) loan managed by Kyongnam Bank in 2008 and embezzling 308.9 billion won in 99 instances through July 2022. With a former Korea Investment & Securities Co. employee surnamed Hwang named as an accomplice, Lee faces charges of siphoning off 228.6 billion won by forging and using withdrawal slips from Nov. 2014 to Aug. 2022, and charges of embezzling 80.3 billion won alone from July 2008 to Sept. 2018.
Investigators said the crimes continued by impersonating an employee of a developer to create fake loan documents or by intercepting loan principal and interest repayment funds remitted by a trust company at the developer's request. Separately from the cumulative amount, the bank's actual loss is known to be about 59.2 billion won, and considering assets seized during the investigation, Lee's actual gains are estimated at about 29 billion won.
While the Supreme Court finalized the 35-year prison term in June last year, it found the forfeiture calculation flawed and remanded only that part. There were two issues. First, the failure to deduct from Lee's forfeiture amount the sum separately ordered from the spouse. Second, calculating the value of 101 kilograms of seized gold bullion based on past prices rather than at sentencing. The intent was to "recalculate the value of the gold bullion based on the time of sentencing."
Following the Supreme Court's intent, the retrial panel first deducted a little over 100 million won forfeited from the spouse, then recalculated the value of the gold bullion. The lower court had valued the gold bullion at about 8.3 billion won as of Oct. 2023, but after reappraisal it was assessed at about 19.1 billion won as of Nov. last year, and the panel reduced the forfeiture accordingly. Because the "current value" of the already seized gold bullion was set higher, the amount recovered in kind grew and the remaining forfeiture shrank.
Lee's side argued for a further reduction, saying the value of the gold bullion would reach 22.4 billion won if the gold price on the 20th, just before sentencing, were applied, but the court rejected the claim. The panel said, "It is natural under criminal procedure that a certain gap arises between the close of arguments and the sentencing date in the price calculation process," adding, "It is objective and reasonable to use the value at a time close to the sentencing date within a reasonable range."