Chair Kim Jeong-gyu of Tire Bank, who was brought to trial on charges of evading tens of billions of won in taxes by operating Tire Bank outlets nationwide under borrowed names, was again sentenced to a prison term in the remand trial. Although the recognized tax amount decreased after the Supreme Court found that the statute of limitations had expired for part of the evaded taxes, the sentence was the same as the appellate ruling before remand.
The Daejeon High Court Criminal Division 3 (Presiding Judge Kim Byeong-sik) on the 2nd sentenced Chair Kim, who was indicted on charges including taxes under the Act on the Aggravated Punishment of Specific Crimes, to three years in prison and a fine of 14.1 billion won. While overturning the appellate ruling before remand, the court again found Kim guilty of the main charges, except for dismissing some tax amounts.
The core issue in this case is who actually operated the Tire Bank outlets. Prosecutors said Kim effectively owned and ran the franchise stores nationwide but registered sole proprietorships under the names of employees or relatives. By attributing sales and income to multiple proprietors, the structure could avoid the high comprehensive income tax rate that would apply to Kim personally.
Kim was indicted in Oct. 2017 on charges of evading comprehensive income tax by omitting cash sales at some outlets or underreporting the scale of transactions. He was also charged with issuing and receiving false tax invoices by accounting as if he had procured outside services, even though he had de facto employees—the entrusted outlet owners—do the work. Prosecutors initially calculated the evaded amount at about 8 billion won.
The trial process grew lengthy. In 2019, the first-instance court sentenced Kim to four years in prison and a fine of 10 billion won. After Kim's side filed an administrative suit disputing the scope of the tax assessment, it took about six years to reach the appellate judgment. During this process, the evaded amount fell from the 8 billion won range to 5.5 billion won, and then to 3.9 billion won.
In July last year, the appellate court found Kim guilty not only of using borrowed names but also of the false tax invoice charges that the first-instance court had found not guilty. At the time, the appellate panel said Kim avoided application of the progressive surtax rate through name borrowing and harmed tax justice and taxpaying awareness. The appellate court sentenced Kim to three years in prison and a fine of 14.1 billion won and took him into custody in court.
In Jan., the Supreme Court sent the case back to the Daejeon High Court. Of the 3.9 billion won in comprehensive income tax evasion from 2008 to 2015, about 840 million won for 2009 and 2010 had to be dismissed because the statute of limitations had expired. However, the Supreme Court did not accept the rest of Kim's grounds for appeal.
The recognized evaded amount in the remand trial decreased to 3.15 billion won. Kim's side argued that the evaded amounts for other years were also overestimated and that the business structure was not an illegal name-lending scheme but a headquarters investment-type franchise model. However, the remand court maintained that it could not reexamine parts already rejected by the Supreme Court.
At the sentencing hearing last month, prosecutors sought seven years in prison and a fine of 70 billion won for Kim. Kim's side said all related taxes had been paid and argued the crimes were not premeditated, asking for leniency, but the court found a prison sentence unavoidable.