Daycare Center Management Who Embezzled 100 Million Won in Subsidies Lose Lawsuit Over 'Brazen' Protest Against Name Disclosure

False Registration of Staff and Children Nets Over 100 Million Won
Court Rules Facility Closure and Name Disclosure Were Lawful

The management of a daycare center, who fraudulently registered staff and children to receive over 100 million won in subsidies, filed a lawsuit claiming that their reputation was damaged by the district office's public disclosure of their names, among other actions, but they lost the case.

According to the legal community on October 5, the eighth administrative division of the Seoul Administrative Court, presided over by Chief Judge Yang Sunjoo, dismissed all claims by three plaintiffs, including the head of the daycare center, Mr. A, in their lawsuit against the mayor of Gangdong District, Seoul, seeking to overturn measures such as the public disclosure of names and facility closure. The court stated, “There was no problem with the investigation or disclosure procedures,” and ruled, “It is the obligation of the district office to publish the list of daycare centers that meet the statutory requirements.”

Seoul Administrative Court, Yangjae-dong, Seocho-gu, Seoul. The Asia Business Daily Database

The case began with a complaint that children enrolled in other daycare centers were falsely registered at the center in question. Gangdong District Office, after receiving the complaint from Hanam City Hall, launched an investigation in October and November 2024.

The investigation found fraudulent claims totaling 118,099,420 won. Six staff were falsely registered to claim over 98 million won in wages and allowances. Additional 20 million won was fraudulently received by falsely registering children or logging absences as attendance to claim childcare fees and costs for meals and snacks. It was also discovered that individuals without qualification were assigned as homeroom teachers, and that expenditure records and childcare logs were not properly managed.

On December 24, 2024, Gangdong District Office ordered the closure of the facility, the recovery of subsidies, the imposition of penalty surcharges, and the revocation of the director's qualifications. On January 7 of the following year, they also decided to publicly disclose for three years the daycare center’s name and address, the names of the representative and director, and details of the violations and sanctions.

Mr. A and others filed a lawsuit arguing that there were procedural defects in the investigation and public disclosure. They claimed they did not receive advance notification prior to the investigation and were not informed that parents would be surveyed. They further insisted that the written confirmations obtained under coercion could not be trusted and that they were not adequately given a chance to state their opinions prior to disclosure. They also argued that the publication of their names damaged their reputation and credit.

The court, however, found that prior notice could have led to the destruction of evidence or the coaching of statements. In fact, one of the operators had asked a falsely registered staff member to say that they worked at the daycare center if contacted by the district office. Some parents were even offered money in exchange for falsely registering their child. After the investigation, statements from parents were confirmed, stating that they received threatening text messages and calls from restricted numbers.

The court also cited as grounds for its decision that the district office verbally informed those present of the investigation’s purpose and other essential matters at the scene, and that Mr. A and others were given opportunities to contest the actions by submitting written opinions and attending a hearing prior to the final measures. The public disclosure measures were also found to have concrete grounds and reasons, with the start date postponed to sufficiently guarantee time for submitting opinions.

Under the Infant Care Act and its enforcement rules, if a facility is ordered closed due to fraudulent receipt of subsidies and the violation amount in a single instance is 3 million won or more, the violations, the names of the daycare, its representative, and the director must be publicly disclosed. The court stated, “There are no special circumstances to view the public disclosure measure as manifestly unjust.”

Mr. A and the other plaintiffs have appealed the first trial verdict, and the case is currently pending before the Seoul High Court.

This content was produced with the assistance of AI translation services.