1. Case Overview
A special corporation established with government subsidies and member contributions to provide guarantees and loans to software businesses issued a performance bond worth KRW 1.5 billion in favor of Company A, operated by the client. One month after the bond was issued, Company A filed for rehabilitation and later went bankrupt. As a result, the special corporation filed a criminal complaint against the CEO of Company A for fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (fraud) and other charges.

According to the corporation's financial statements, its operating profits had been in the red for two consecutive years prior to bankruptcy, its credit rating had dropped three notches compared to the previous year, and immediately before bankruptcy, it recorded a deficit of KRW 18 billion. This situation made the likelihood of indictment against the CEO quite high, and if indicted, the alleged gain exceeded KRW 500 million, which could have resulted in severe criminal penalties.

2. Our Arguments and Role
We presented to the investigative authorities (i) objective evidence demonstrating that the software contracting business, such as that operated by the client's company, inherently carries significant liquidity risks, and also substantiated through the external audit reports that the company's creditworthiness had been sufficiently sound; and (ii) detailed explanations showing that, given the management status of the company's assets and premises after its bankruptcy, there had been no intent to defraud on the part of the CEO.

3. Summary and Significance of Investigation Result
The investigative authorities fully accepted our arguments, recording them as the grounds for non-indictment (lack of suspicion). Despite the fact that recent cases typically take a long time to process, the authorities rendered a swift decision of non-indictment not only with respect to the fraud charge under the Act but also with respect to the occupational embezzlement charge, only about two months after the complaint had been filed.