The Supreme Court rendered the 104-Tai-Shang-391 Criminal Decision of February 5, 2015 (hereinafter, the "Decision"), in which it was expounded that a non-banking entity shall not operate deposit business and that the fact of illegal absorption of funds is not affected by a packaging ploy where the citizens are contractually entitled to receiving relevant products.
According to the facts underlying the Decision, it was determined in the original decision that the Appellant who was a Director and the General Manager of Yun Tai Co. absorbed funds from unspecified individuals together with his wife under the pretext of capital contribution to join Yun Tai Co. as its members and also absorbed funds from unspecific individuals in the name of product consumption. Therefore, this constituted an offense under Article 29, Paragraph 1 of the Banking Law, which provides: "Unless otherwise provided by law, any organization other than a bank shall not accept deposit, manage trust funds or public property under mandate or handle domestic or foreign remittances."
Article 29-1 of the Banking Law provides: "Using borrowed money, accepting investments, making the depositor a shareholder or using other classifications in order to accept deposit or obtain capital from the general public by agreeing to pay or paying a bonuses, interests, dividends or other remuneration in an excessive amount shall be deemed the act of accepting deposit." The Appellant contended that the funds absorbed from unspecified individuals include the consumption revenue from the distribution of the company's packaged products, and that gains earned by creating a distribution network through promoting or selling goods or services or introducing others to join the network should be similar to the multi-level marketing issues under Article 8 of the Fair Trade Law rather than the act of "accepting deposit" set forth in the original decision. In addition, the original trial court previously attached relevant documents in this case to its request to the Banking Bureau of the Financial Supervisory Commission for an opinion as to whether the act at issue is an act of "accepting deposit" within the meaning of Article 29-1 of the Banking Law. The Banking Bureau replied in its letter as follows: "…the illegal act of fund absorption under the Banking Law refers to the delivery of money by a participant in exchange for excessive rewards obviously not comparable to the principal in the future. However, if the distribution or promotion of goods or services is involved or if money is delivered only when a certain condition is satisfied, this would not fall within the scope of accepting deposit under the Banking Law. Whether such individuals accepted deposit in violation of the requirement that a non-banking entity shall not accept deposit under the Banking Law in this case pertains to the determination of a criminal fact. Please make the determination based on the above explanation…" Dissatisfied with the decision of the original trial court, the Appellant appealed.
According to the Decision, under Article 29-1 of the Banking Law and according to its legislative objectives, if an actor absorbs funds by entering into a membership agreement with the citizens with provisions that stipulate the payment of bonuses, interests or remuneration in excessive amounts which are obviously incomparable to the principals, this will constitute illegal operation of deposit business, and the fact of the illegal absorption of funds is not affected by a packaging ploy where the citizens are additionally entitled to receiving relevant products under such agreement. In addition, the Financial Supervisory Commission has stated specifically in the above letter that whether the Appellant violated the Banking Law that prohibits a non-banking entity from accepting deposit is a matter of criminal fact, which should be determined by the court. Therefore, the letter at issue cannot be relied on as a basis for any determination in favor of the Appellant. Based on the foregoing reasons, it was held in the Decision that since the opinion and findings in the original decision were not erroneous, the Appellant's appeal was rejected.