People's Court Daily: Determination of the crime of fraud in disputes involving private lending

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How to determine the purpose of fabricating facts and illegal possession in disputes involving private lending

Author: Tang Fugui, People's Court of Minquan County, Henan Province

[Facts]

In August 2014, Liang took out a loan of 12 million yuan from a bank in Minquan County, Henan Province, with a loan term of one year, and Wei used 3 million yuan of the loan. In August 2015, the bank loan expired, and Wei Moumou borrowed money from Du Moumou through his ex-wife Tian Moumou on the grounds that the bank loan needed to be repaid when the bank loan expired, and Du Moumou remitted 2.5 million yuan to Wei Moumou on August 13, 2015, and on the same day, Wei Moumou transferred the loan and self-raised 300,000 yuan, a total of 2.8 million yuan, to Liang's bank card to repay the bank loan. On August 18, 2015, Wei repaid Du 100,000 yuan. After the loan expired, Wei Moumou invested the loan of 2.5 million yuan that should be repaid into a square project in Minquan County undertaken by both parties. Regarding the reason for the loan, Du Moumou said that when borrowing, Wei Moumou said that he had paid a deposit, and Wei Moumou did not issue an IOU to him.

【Divergence】

Regarding the reason and purpose of the loan, Wei XX and Du XX have different statements, and there is a great deal of controversy in practice about which statement to adopt, and the different understandings are directly related to whether Wei XX constitutes the crime of fraud. The first view is that Wei XX and Du XX are in a partnership relationship in a certain square project of civil rights, Wei XX fabricated the fact of paying the project deposit, and borrowed 2.5 million yuan from Du XX to repay his due bank loan, and Wei XX fabricated facts and concealed the truth for the purpose of illegal possession, causing the victim to have a wrong understanding and defrauding the victim of money, and his conduct has constituted the crime of fraud. The second view is that Wei XX explained the purpose of the loan when he borrowed money from Du XX, and issued an IOU, and transferred the money to Liang XX on the day the loan was received to repay the due bank loan, and Wei XX did not adopt the method of fabricating facts or concealing the truth, which does not constitute the crime of fraud.

[Commentary]

The author agrees with the second point of view for the following reasons:

The focus of the dispute in this case is whether Wei Moumou had the act of fictitious use of the loan and the purpose of illegal possession.

In the course of trial of a case, it is necessary to correctly distinguish the boundaries between the crime of fraud and private lending disputes, to determine whether the perpetrator subjectively has the purpose of illegally taking possession of other people's property, and to mainly ascertain the basis of the circumstances on which the lending relationship between the two parties occurred, whether the perpetrator obtained the property of others by deception, whether the victim had a "loan" relationship with the actor on the basis of being deceived, the relationship between the actor and the victim and daily contact, and other basic circumstances, the actor's reasons for borrowing, Whether the facts are fabricated or concealed on issues such as the purpose and repayment measures, whether the reasons for the actor's inability to repay the loan are reasonable, whether there are conditions for repayment, and the basic attitude towards repayment, etc.

The structure of the conduct of the crime of fraud mainly refers to the perpetrator's deceptive conduct, causing the other party to produce or maintain a misunderstanding, the other party disposes of property based on the misunderstanding, and the perpetrator obtains property, causing the other party to suffer property losses. The composition of this crime requires not only that the perpetrator have deception and intentional concealment, but also that he must have the subjective intent of illegal possession. Private lending disputes refer to disputes arising from the borrower and the lender reaching a loan agreement, and the borrower borrows money from the lender and the borrower fails to repay it on time. It is a civil legal relationship, which should be regulated by civil law and does not give rise to criminal liability. The difference between the two lies mainly in the subjective aspect, i.e. whether the perpetrator has the purpose of unlawful possession. The so-called "purpose of illegal possession" refers to the perpetrator's intention to use illegal means to exercise de facto possession, use, income or disposition of property owned by others, thereby infringing upon the normal exercise of the ownership rights of others over a particular property.

One is to consider the relationship between the borrower and the borrower. The analysis of private lending disputes shows that there is a specific social relationship between private borrowers and borrowers, such as friends, relatives, classmates or third-party guarantees, and the borrowers maintain certain contacts with each other, and trust is the prerequisite for the occurrence of lending relationships. Most of the fraud crimes occur between two parties who are relatively unfamiliar or do not know each other, and deceive each other by deception. The fact that the perpetrator did not have a reasonable reason for borrowing money and the conditions for repayment, but used the payment of high interest as a bait to deceive the loan and squander it at will, this is obviously an improper lending relationship, and even if a written IOU and other documents are issued, it can only be regarded as a means of fraud and is a crime of fraud. However, if some actors do have reasonable reasons such as medical treatment, business, marriage and funeral events at the time of borrowing, and also have certain repayment conditions and sincerity, and cannot repay the money on time due to some objective reasons, it should be handled as a general debt dispute. If the relationship between the two parties is only an economic dispute, but the inability to repay the loan normally due to other objective reasons such as investment failure, capital turnover failure, etc., is characterized as a crime of fraud, which violates the principle of modesty in the criminal law. Just as in this case, Wei Moumou met Du Moumou through Tian in October 2014, and later cooperated with Du Moumou to develop a square project in Minquan County, and the two parties were friends and had a business cooperation relationship. In August 2015, due to the need to repay the loan, he borrowed money from Du. The parties have established a certain relationship and maintained a certain degree of interaction, and are relatively familiar with each other, which is in line with the characteristics of the specific relationship between the parties to a general loan dispute.

The second is to consider the reasons for the occurrence of the lending relationship. In general private lending disputes, the borrower often encounters certain difficulties and is temporarily unable to provide financial support, so in order to solve the financial problem, the borrower borrows from a specific person, in order to alleviate the financial difficulties. Even if the creditor is unable to repay the loan at a later stage, most of them have certain objective reasons, and when the creditor requests to repay the loan, the borrower will actively negotiate and communicate with the creditor to resolve the problem by changing the loan, paying in installments or providing security. In the name of borrowing money, the perpetrator of the crime of fraud deceived the victim into sympathy or trust by fabricating false and difficult facts and concealing the true purpose of illegal possession, causing the victim to dispose of property out of a misunderstanding. After the perpetrator succeeds in fraud, most of them will squander the stolen money they have defrauded, causing huge losses to the victim. In cases where private lending is suspected of being a criminal offense, there are usually situations where several borrowing behaviors are superimposed and transformed into crimes such as illegally absorbing public deposits and fund-raising fraud. In this case, Wei's reasons and purposes for borrowing money from Du were different from Du's statements, and Wei's confession and Tian's testimony both confirmed that Wei explained to Du that he was repaying the bank loan when he borrowed money, and issued an IOU to Du, while Du said that Wei said that he had paid a deposit when borrowing, and Wei had not issued an IOU to him. In the civil case (2019) Yu 1421 Min Chu No. 4908 heard by this court, Du Moumou recognized that 2.5 million yuan was a loan, not the operating funds of a square project in Minquan, and the two parties had a dispute over the purpose of the loan. After Du transferred 2.5 million yuan to Wei's account, Wei transferred the money to Liang on the same day to repay the due bank loan, which corroborated Wei Moumou's statement that the loan was to repay the bank loan. Moreover, the testimony of the witness Liang also confirmed Wei's statement. To sum up, the existing evidence in the case cannot prove that Wei Moumou fabricated facts or concealed the truth when he borrowed money from Du Moumou.

The third is to consider the reasons why the borrower fails to repay on time. In a normal lending relationship, after the loan expires or the creditor requests the realization of the creditor's rights in advance, the borrower will generally actively communicate and negotiate with the creditor, and if the borrower does encounter objective difficulties that are not transferred by his will, and the borrower cannot repay in accordance with the loan agreement or the creditor's request, the borrower will not deny the existence of the loan relationship, but will reach a repayment agreement according to the intention of both parties. The crime of fraud is just the opposite, the perpetrator establishes a loan relationship in the form of a loan on the surface through fabricated loan facts, and even uses some items of low value or false price as collateral to cover up his criminal acts, gain the trust of the victim, and cause the victim to agree to borrow, and after the property is in hand, the perpetrator will usually dispose of the property obtained by fraud, so as to achieve the purpose of taking possession of the victim's property. After the dispute between Wei and Du, Wei did not flee or transfer assets, and always maintained contact with Du. The evidence in the case is sufficient to confirm that Wei, Du, and Cui are in a cooperative relationship in a square project in Minquan County, and the two parties have not yet been liquidated.

To sum up, in general private lending behavior, the borrower may be temporarily unable to repay the loan on time due to some reason or practical difficulties, but as long as the borrower does not fabricate facts, does not have the purpose of illegal possession, and does not squander and waste the behavior, and subjectively or behaviorally has the intention to repay, it is an ordinary private lending dispute and does not constitute the crime of fraud. Therefore, defendant Wei XX's conduct was a private loan and did not meet the constitutive elements of the crime of fraud, and should not be convicted and punished as the crime of fraud.

(Author's Affiliation: Henan Provincial People's Court of Minquan County)