Corporate Crime Defense Embezzlement Non Prosecution

The client co-founded and jointly operated a café with the complainant under an oral partnership agreement, with both parties contributing initial capital and sharing operational responsibilities.

From the outset, the client assumed primary responsibility for day to day management, including payroll, supplier payments, and cash flow administration, while regularly advancing personal funds to stabilize operations.

All questioned expenditures were directly tied to business needs such as labor costs, inventory procurement, and emergency operating expenses.

The client maintained that the complainant received recurring updates regarding revenue and expenses and raised no objections until the business encountered financial difficulty, undermining any claim of unauthorized use or criminal intent under corporate crime standards.

The complainant asserted that the client diverted joint business funds for personal use without consent, emphasizing the withdrawal and expenditure of a substantial sum allegedly exceeding two hundred million KRW equivalent.

According to the complaint, financial decisions were made unilaterally and without adequate explanation, leading to the assertion that the client functioned as a custodian of funds rather than a co-owner.

On this basis, the complainant characterized the conduct as criminal embezzlement, attempting to reframe a partnership dispute as a corporate crime offense under District law.

The primary issue was whether a fiduciary or entrusted custodial relationship existed between the parties, as D.C. Criminal law requires proof that the accused was entrusted with property belonging exclusively to another.

Additional questions included whether the disputed funds were used for non business purposes, whether the complainant consented expressly or implicitly to the financial practices, and whether any intentional deprivation of property could be established.

In the absence of a written agreement defining fund custody, the prosecution’s theory depended heavily on inference rather than objective proof, a weakness repeatedly emphasized by the defense.

Under Washington D.C. Law, embezzlement requires proof that the accused knowingly converted property entrusted to them for personal benefit with intent to permanently deprive the rightful owner.

Joint ownership or equal managerial authority negates the “entrustment” element, while transparent accounting and shared access to financial information undermine claims of fraudulent intent.

Counsel argued that without demonstrable personal enrichment or concealment, the matter failed to meet the threshold for corporate crime prosecution and remained, at most, a civil accounting dispute.

Counsel secured bank transaction records, payroll logs, supplier invoices, and point of sale data demonstrating that the disputed funds were allocated to routine business expenses.

Digital forensic analysis extended to messaging applications, call logs, and emails confirming ongoing discussions between the partners regarding operational costs and cash shortages.

These records showed that expenditures were neither concealed nor inconsistent with prior business practices, directly contradicting allegations of misappropriation and reinforcing the absence of criminal conduct.

A central pillar of the defense was establishing that the client and complainant operated as equal partners rather than principal and agent.

Counsel demonstrated that both parties possessed decision making authority and benefited jointly from revenues, eliminating the legal foundation for an entrustment relationship.

The consistent pattern of shared financial knowledge and the complainant’s prior acquiescence to expense decisions further weakened any claim of unauthorized control, a decisive factor in corporate crime assessments under District law.