A 33-year-old man surnamed Kim received a non-prosecution decision from Cheongju Sangdang Police Station on February 2 regarding his fraud complaint against his former company president, identified as Mr. A. The police cited insufficient evidence as the reason, sparking controversy given Mr. A’s prior conviction for a similar offense.
Background of the Direct Sales Company
The company in question, a direct sales firm established in 2016, has a history of internal disputes. Kim joined later and developed a close relationship with Mr. A, who introduced him to fellow employees for recommendations and built trust through personal connections.
Encouraged to invest heavily, Kim contributed 93 million won. Two other colleagues covered sales quotas by paying 60 million won and 67 million won, respectively.
Prior Conviction in 2019
Seven years ago, in 2019, Mr. A targeted another employee at the same firm. He was sentenced to 10 months of probation after a court ruled that using his position to pressure subordinates into taking loans for investments constituted despicable conduct.
The court stated, “Forcing junior staff to secure loans from finance companies to fund participation is unacceptable.”
Kim’s Complaint and Challenges
Unlike the earlier victims who filed a joint lawsuit, Kim lacked a written loan agreement, relying only on verbal discussions during a private meeting. He has no clear evidence of repayment intent, complicating his case.
Police conducted a raid on Mr. A. A key point of contention is an alleged alteration in sales records following Kim’s individual meeting, where the outstanding balance was reduced from 70 million won to just 9 million won—a move experts view as economically suspicious.
Kim pursued a refund through civil court in December, with a partial judgment already issued, though the full outcome remains pending.
Reasons for Non-Prosecution
Investigators noted that Mr. A claimed sales of approximately 7 billion won to Kim by July 2018, equivalent to 250 million won monthly. He argued the principal was adjusted due to a 27% default rate on unpaid portions, reclassifying about 5 billion won as interest rather than principal.
However, records were reportedly changed post-meeting to reflect team sales exchanges. Police highlighted that pursuing charges for intentional fraud in sales leadership issuance offers a loophole to evade broader sales violation penalties.
Expert and Victim Perspectives
Legal representatives for Kim maintain the claim is legitimate, though such precise matching of circumstances is rare. A victim representative told Yonhap News, “There is no contractual provision allowing principal to be converted into exploded interest due to default rates, nor was a 27% threshold ever mentioned.”
The investigation into the company’s role continues if intent is proven despite the non-prosecution. Kim now awaits the police’s final determination on the core allegations.
