How to break the "purpose of illegal possession" in the crime of fund-raising fraud and strive for acquittal or other crimes?
Author: Mr. Zhang Chun, core lawyer of Guangdong Guangqiang Law Firm's Economic Crime Defense and Research Center, focusing on the defense of economic crime cases
Note: This article is original and may not be reproduced without permission
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In judicial practice, because the perpetrator may appear in the confession record, the prosecution may directly determine the existence of subjective intentions and thus increase the guilt, or the perpetrator will "fabricate" some reasons to make it difficult for the judicial organ to find out the true situation in an attempt to evade legal sanctions, but in fact, for "illegal possession for the purpose" should be to adhere to the subjective and objective unity of the determination criteria. This article mainly discusses the situation in judicial practice in which the "purpose of illegal possession" is determined, so as to provide some ideas for the parties or families of fund-raising cases to defend other crimes or innocence.
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In 2021, the Supreme People's Court issued the Interpretation on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund-Raising (hereinafter referred to as the "Interpretation"), which stipulates eight situations in which travel can be presumed to have "illegal possession for the purpose". These eight situations are summarized by the author into three categories: 1, deliberately can not; 2, unwilling to repay; 3, other. 1. The circumstances of deliberate inability are: hiding with the funds raised; not used for production and operation or only used for a small part of the production and operation; wantonly squandering, so that the funds raised cannot be returned; withdrawing, transferring funds, concealing property, and evading the return of funds; hiding or destroying accounts, or engaging in false bankruptcy or fake bankruptcy to evade the return of funds; 2, the situation of unwillingness to repay is: refusal to account for the whereabouts of funds and evading the return of funds; 3, other situations are, "other circumstances that can be determined as the purpose of illegal possession."
From these eight situations, it can be seen that in fund-raising fraud, "for the purpose of illegal possession" is an act that the perpetrator knows or should know that there will be losses to the investor, and still holds a laissez-faire attitude, resulting in the investor suffering property losses.
Of course, in the process of handling specific cases, because the criminal model of each case is different, it is inevitable that there will be some differences in the defense, according to Mr. Zhang's practical experience, it is generally possible to prove whether the perpetrator has the "purpose of illegal possession" from the following models, so as to defend other crimes or innocence:
First, see whether the perpetrator has the ability to repay the money. When the perpetrator starts to raise funds and in the process of raising funds, if the actor has the ability or has assets that can be realized to repay the money and interest of the raised funds, it cannot be regarded as illegal fundraising.
I once encountered such a case, A to their own people continue to borrow money, repay money, the amount of loan reached tens of millions, and finally the investor's funds did not quickly return, resulting in the borrower to report the case, the public security really to raise funds fraud to file a case, and later we found that A has enough fixed assets (such as caravans, etc.) the ability to repay, every month there is repayment of interest and principal, to the later stage of interest is too high, so A's capital flow has broken, so A began to repay only the principal every month. Then this case is a typical "borrow the new to pay back the old", like this case he and no repayment ability or there is an essential difference, the key point here is that there are fixed assets (have the ability to repay), but there is no cash flow, can not be identified as fund-raising fraud.
However, if the actor continues to raise funds after failing to repay the principal and interest of the investor, it is bound to lead to a larger and larger deficit of funds, and it cannot be ruled out that the actor does not have the purpose of illegal possession.
Second, look at the high cost of the perpetrator's use of funds. In practice, the rate of return promised by the actor to the company's employees or investors is much higher than that of the bank, thus triggering the enthusiasm of employees and the investment of unspecified groups, this behavior is undoubtedly to raise the cost of fundraising, which may be identified as a criminal amount to be recovered, which means that the actor does not invest or will invest a small part of the funds in the business process, resulting in the possibility of finally not paying the principal and interest, which is also one of the important factors for the actor to have the purpose of illegal possession. But this does not mean that the above situation is necessarily a fund-raising fraud, on the contrary, we put aside the promised income to investors or employees can also operate normally, then it is not a fund-raising fraud. Expenses such as normal wages paid to employees may not be included in the amount, because if employees work without knowing the platform, normal remuneration cannot be regarded as illegal and should not be recovered.
Third, look at the degree of responsibility of the actor for the use of funds. In fact, this is to see the degree of management of the funds by the actor, if the actor uses the funds that should be used for production and operation to simply consume, squander, withdraw and other situations, causing a huge fund gap, this behavior reflects the lack of scientific and reasonable planning of the perpetrators of the fund-raising funds, and finally the laissez-faire attitude towards the occurrence of losses. Conversely, if the perpetrator does not have the above factors, but is only caused by unpredictable factors such as market risks and economic downturns, it cannot be accused of having the purpose of illegal possession.
Fourth, see whether the return of principal and interest by the perpetrator is achieved by borrowing the new to repay the old. In the process of fundraising, the perpetrator has sufficient sustainable funds or the disposal of fixed assets will not lead to this situation. However, if the perpetrator continues to raise funds without having sufficient profits, he still "fabricates" some objective facts that do not exist, and in the end, he can only use the later fund-raising funds to return the due funds in the early stage, that is, "tear down the eastern wall to make up for the western wall". The reason why "demolishing the east wall to make up for the west wall" will be considered fraud is because the occurrence of losses in this situation is inevitable, but it is only a matter of time.
Fifth, see whether the actor uses the funds for production and operation.
In order to gain the trust of investors, some actors will make up some entity projects.
I once handled such a case in Guangzhou, the perpetrator made publicity materials to open hotels, resorts and other projects to attract investors to invest, in the process of publicity in order to gain trust and once brought fund-raising participants to the villa to investigate, the project at this time is in the process of construction, then the fund-raising funds are used to build physical projects, can not be identified as fund-raising fraud. Conversely, if the resort does not have the expected profitability, or even exaggerated publicity, and the perpetrators do not tell the investors truthfully, the project is likely to be a gimmick for fundraising fraud.
However, for this act, it is also necessary to distinguish between the personnel inside, and for the perpetrators who have no purpose of illegal possession, they cannot be convicted and punished according to the crime of fund-raising fraud. In the people's judicial case: Huang Mou's fund-raising fraud case (see People's Justice, No. 11, 2017), the court held that:"Where some of the perpetrators' illegal fund-raising acts have the purpose of illegal possession, the funds-raising funds involved in the illegal fund-raising acts are convicted and punished as the crime of fund-raising fraud; in the joint crime of illegal fund-raising, some of the perpetrators have the purpose of illegal possession, and the other actors do not have the common intention and behavior of illegally possessing the fund-raising funds, the perpetrators with the purpose of illegal possession shall be convicted and punished with the purpose of fund-raising." ”
Of course, for the actor to absorb the funds, only to change the use of the funds, but the funds are still used for the legitimate production and operation activities of the enterprise, it is naturally impossible to understand that the actor illegally occupied the funds.
Sixth, see if the perpetrator has squandered the funds raised.
In the People's Judicial Case: Zhang Mou's Fund-raising Fraud Case (see People's Justice, No. 29, 2016), the court held that": "Holding that a person uses most of the illegal fund-raising for production and operation, and a small part of the funds for high-end consumption, in the case of not exceeding the expected income, it should not be considered squandered, and it cannot be determined that the perpetrator subjectively has the purpose of illegal possession, thus determining that it constitutes the crime of fund-raising fraud." ”
Looking at Article 4 of the Interpretation, "arbitrarily squandering investment funds so that the funds raised cannot be returned" can be identified as "for the purpose of illegal possession." This sentence, we have to add up to look at, that is, "wanton squandering of investment funds + so that the collection of funds can not be returned = for the purpose of illegal possession", the two prerequisites are indispensable, if the perpetrator has squandered the investment funds, such as buying a car, buying a bag, etc., but for the funds raised can be returned in accordance with the agreement in time, you can not accuse the crime of fund-raising fraud, in fact, this situation is to see the strength of the perpetrator's squandering. However, if the perpetrators squander it, there is a risk that "the funds collected cannot be returned." ”
Seventh, see if the perpetrator can control the direction of the money.
In fact, this situation is somewhat similar to what we said earlier that "some people who have no purpose of illegal possession cannot be identified as the crime of fund-raising fraud". For the accusatory control of the fund-raising funds, it can be inferred that it has the purpose of illegal possession, for the co-defendants who do not have funds, it is usually not determined that they have the purpose of illegal possession, because in the case of fund-raising fraud, different actors have different divisions of labor, for some people who are engaged in important activities, such as customer service, publicity and promotion, website operation, recommending customers, etc., if the use of funds is known, then their help behavior directly points to the crime of fund-raising fraud. If the flow of funds is not known, it may constitute another crime, such as the crime of illegally absorbing deposits from the public, or even not a crime.
Eighth, see whether the investor can recover the investment money through civil litigation procedures.
In some cases, the two parties clearly signed an agreement/contract when raising funds, there is an agreed interest, litigation channels, etc., when the actor cannot return the principal and interest, the actor has fixed assets or other property, then the investor at this time can get back the raised funds through civil litigation procedures, and it cannot rise to the scope of criminal sanctions.
Of course, if all the agreements/contracts at the time of fundraising are false, then it can basically be determined that the actor has the purpose of illegal possession when signing the contract, and the investor cannot recover the raised funds through normal litigation procedures, and the actor at this time also has the intention of illegal possession purpose.
Ninth, look at the attitude and related behavior of the perpetrator after the fact.
Where the perpetrator flees after financing; where the perpetrator withdraws, transfers, or conceals property after financing in order to evade the return of funds; where accounts are concealed or destroyed after financing, or where the perpetrator commits false bankruptcy or false bankruptcy in order to evade the return of funds, it is often presumed that the perpetrator subjectively has the purpose of illegal possession, and the Minutes of the National Forum on the Trial of Financial Crime Cases by Courts make clear provisions on this.
In summary, the above is the "purpose of illegal possession" identification situation (not exhaustive), as a lawyer should also be based on the specific circumstances of the case combined with physical evidence, such as: investment contracts, publicity materials, capital transactions, accounting vouchers, the process of use and other evidence, adhere to the subjective and objective unified standards to carry out defense, to protect the legitimate rights and interests of the parties and their families.
The above content is Zhang Chun, the core lawyer of the Economic Crime Defense and Research Center of Guangqiang Law Firm, who, in accordance with relevant laws and regulations and practical experience, has made a judgment on "How to Break the "Purpose of Illegal Possession" in the Crime of Fund-Raising Fraud and Strive for Acquittal or Other Crimes?" " collation. We hope to provide useful help to the parties and their families.