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Foreign contract economic fraud case

Recently, the economic investigation detachment of Shandong Dongying Public Security Bureau arrested the suspect Wu, and the first foreign-related economic crime in Dongying finally came to light.

In 2004, Buyer, a Ugandan businessman, participated in the Guangzhou Trade Fair. Buyer was interested in several socks and bath towels made in Shandong provided by Mr. Wu. Both parties then left their email addresses and contact information with each other. After Buyer returned home, Wu sent the samples to Buyer. Buyer was very satisfied and reached an agreement on price, style, payment method and delivery method.

On September 24 of the same year, Mr. Wu signed an import and export contract with Buyer valued at $38640 through an import and export company in Dongying, Shandong Province. On September 25, Buyer remitted US $11156 to the account of the import and export company acting for Mr. Wu through telegraphic transfer, and the import and export company transferred the money to Mr. Wu on the same day. On November 9, Buyer remitted a second amount of US $11156 to the account of the import and export company through telegraphic transfer.

From 2004 to 2005, in order to paralyze Buyer, Wu sent several emails to Buyer, saying that he was organizing the production of goods. When Buyerr asked him to provide product photos, Wu replied that the packaging had been completed and the product could not be opened for display. Later, buyer could no longer contact Wu, which made him realize that he had been cheated.

On April 20, 2007, the Economic Investigation Detachment of Dongying Public Security Bureau received a notice from the National Central Bureau of Uganda, which was forwarded by the Shandong Provincial Public Security Bureau, requesting assistance in the investigation of the case. The police in charge of the case found that after receiving the payment for goods, Wu thought that the other party was far away from Africa, and then squandered the money.

On May 14, the police finally contacted Wu after dialing several mobile phone numbers he had used. The police immediately arrested him and interrogated him. During the interrogation, Wu insisted that the matter between him and Buyer was an economic dispute. When the police of the special task force put a large amount of evidence and the email in front of him, Wu confessed the crime.

The crime of contract fraud, in any of the following cases, defrauding the other party’s property in the process of signing and performing a contract for the purpose of illegal possession, if the amount is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; If the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than 10 years and shall also be fined; If the amount is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment and shall also be fined or sentenced to confiscation of property;
(1) Signing a contract in the name of a fictitious unit or in the name of another person;
(2) Using forged, altered or worded bills or other false certificates of property rights as security;
(3) Having no actual capacity to perform, luring the other party to continue to sign and perform the contract by first performing a small amount contract or partially performing the contract;
(4) Evading after receiving the goods, payment for goods, advance payment or security property paid by the other party;
(5) Defrauding the property of the other party by other means.

Filing criteria:
According to Article 77 of the Provisions of the Supreme People’s Procuratorate and the Ministry of Public Security on the Standards for the Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II) on May 7, 2010, anyone who, for the purpose of illegal possession, defrauded the other party’s property in the process of signing and performing the contract, and the amount was more than 20000 yuan, should be filed for prosecution.

Judicial interpretation:
According to the Supreme Law of November 28, 2016, “Opinions on the Implementation of Properly Handling Historically Formed Property Rights Cases in accordance with the Law” (Fa [2016] No. 28), accurately grasp the legal policy boundary between crime and non-crime. Strictly distinguish between economic disputes and economic crimes, especially the boundary between contract disputes and contract fraud, the boundary between legitimate financing and non-illegal fund-raising of enterprises, and the boundary between economic disputes involved in the merger and reorganization of state-owned enterprises by private enterprises and malicious encroachment on state-owned assets. Accurately grasp the criteria for economic illegal acts, accurately identify the nature of economic disputes and economic crimes, and resolutely correct the wrong effective judgments that regard economic disputes as crimes. For economic activities in production, operation, financing and other activities, which are not explicitly prohibited by laws and administrative regulations at that time and are punished as crimes, or which are illegal but do not constitute crimes and are punished as crimes, they shall be corrected according to law.

According to the Supreme Law of December 29, 2017, “Notice on Giving Full Play to the Role of Justice to Create a Good Legal Environment for Entrepreneurs’ Innovation and Entrepreneurship” (Law [2018] No. 1), the criminal law and judicial interpretation shall be strictly implemented to resolutely prevent the use of criminal means to intervene in economic disputes. Adhere to the principle of a legally prescribed punishment for a crime, and entrepreneurs’ innovation and entrepreneurship in production, operation and financing activities shall not be punished as a crime as long as they do not violate the provisions of criminal law. Strictly enforce the constitutive requirements of the crime of illegal business operation and contract fraud, and prevent arbitrary expansion of application. Civil disputes arising from the signing and performance of the contract shall not be treated as criminal cases without sufficient evidence to prove that they are consistent with the criminal constitution. Strictly distinguish between the illegal income and legal property of entrepreneurs. If there is no sufficient evidence to prove that it is illegal income, no judgment shall be made to recover or order to refund compensation.



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