[According to the Law of Expediency] 69. If You Received a Call Suspecting Fraudulent Subsidy Receipt

*This content was translated by AI.

As the scale of financial support from the central government and local governments has grown, penalties for fraudulent subsidy receipt have also become stricter.

Today, if fraudulent receipt is confirmed, it goes beyond merely canceling the grant decision and ordering repayment. A penalty surcharge of up to five times the amount to be repaid may be imposed, participation in similar projects will be blocked for several years, and separate criminal proceedings will be initiated. The total adverse consequences arising from a single factual scenario far exceed the original subsidy received.

The Daejeon High Court ruled that an entity which falsely claimed to have hired dedicated staff without actually doing so, and transferred labor costs to accounts of individuals who did not work, thereby creating the appearance of proper execution, had committed an active act intended to mislead grant decisions and post-execution settlements—not merely a clerical accounting error. As a result, the court held that canceling the grant decision, ordering repayment, excluding the entity from future performance, and imposing a penalty surcharge were all lawful determinations.

The Suwon District Court also ruled in a case involving the Youth Digital Jobs Program, where subsidies were obtained using forged employment contracts and wage records, that treating the entire disbursed amount as fraudulent receipt and imposing a penalty surcharge equal to five times that amount was legal. If it is impossible to distinguish between properly executed portions and improperly received portions, the entire amount serves as the basis for penalties.

Meanwhile, as penalties become more severe, the necessity for equally strict procedures in imposing them also grows stronger. The Incheon District Court ruled that applying revised settlement guidelines retroactively to financial support already disbursed prior to their enactment was illegal, violating the principle prohibiting retroactive application of adverse administrative acts.

Another notable trend exists. The Supreme Court has recognized that fraudulent receipt of fuel subsidies not only constitutes an administrative penalty target but can also establish civil tort liability. In some cases, the direct victims have been specifically identified as local governments responsible for managing payment operations using vehicle tax revenues as a funding source. Thus, administrative penalties, criminal punishment, and damages can now operate simultaneously across three distinct directions.

What must be emphasized here is not the severity of penalties but the accuracy of determinations. Most fraudulent receipt cases do not originate from premeditated fraud but arise from misunderstandings of eligibility requirements or inadequate document management at business sites. Nevertheless, under the current penalty system, once classified as a "fraudulent application," it automatically triggers full repayment, maximum surcharges, and long-term participation restrictions. Therefore, how meticulously factual circumstances are verified at the classification stage determines the legitimacy of the entire system.

The criteria for distinguishing fraudulent receipt are already established: whether methods recognized as improper under social norms were used to influence grant decision-making despite being ineligible through normal procedures. Merely having discrepancies between documents and facts does not automatically constitute fraud; it must be determined whether such flaws actually affected the decision on payment or the amount disbursed.

The same principles apply to those facing penalties. Simply claiming injustice is insufficient; one must be able to sequentially substantiate documents submitted at the application stage, fund flows during execution, and reports filed at the settlement stage. Explanations submitted without such prepared materials may even be interpreted as circumstantial evidence of intent.

One should remain mindful of these points to avoid becoming entangled in fraudulent receipt disputes. If contacted by an administrative agency suspecting fraudulent receipt, it is advisable to gather relevant documents and seek legal counsel from a qualified expert.

<© STARNEWS. All rights reserved. No reproduction or redistribution allowed.>

*This content was translated by AI.