The Distinction between Criminal Fraud and Civil Fraud from Zhang's Case

On May 31, 2018, the Supreme People's Court issued a public verdict on the retrial case of Zhang Chunzhong's fraud, unit bribery, and misappropriation of funds, revoked the original judgment, and changed the verdict of Zhang Chunzhong's innocence. At the same time, the defendant in the original trial was sentenced to Zhang Weichun and the original trial. The defendant unit Wumart Holding Group Co., Ltd. (hereinafter referred to as Wumart Group) is not guilty. Zhang's retrial case is the first case that the Supreme People's Court has arraigned in this headquarters since the founding of the People's Republic of China and directly acquitted. It is also a benchmark case that contains many judgment rules and judicial concepts worthy of in-depth study. However, the space is limited, this paper only for Zhang's case of fraud, to discuss the distinction between criminal fraud and civil fraud.

The fraud crime involved in Zhang's case originated from the unit behavior of Wumart Group in 2002 to declare the technical transformation project of national debt. The so-called national debt technical transformation project refers to the technical transformation loan project arranged by the state organization supported by the special funds of national debt. The original 1. court of second instance held that Zhang's behavior constituted the crime of fraud by posing as a subsidiary of a state-owned company in the process of Wumart Group's declaration of the 2002 national debt technical transformation project to defraud the national debt technical transformation discount funds. According to the second-instance judgment made by the Hebei Higher People's Court, the factual basis of the conviction of the Hebei Higher People's Court can be summarized as the following three points:(1) The subject of the declaration is false. The key national technological transformation projects are mainly selected from large state-owned enterprises and large state-controlled enterprises. Private enterprises do not fall within the scope of national debt technical transformation discount funds. Knowing that Wumart Group is not qualified to declare the national debt technical reform discount funds, Zhang still let Wumart Group pretend to belong to the state-owned company of Chengtong company's subordinate enterprises to declare the project. (2) Declaration of false content. Under Zhang's instigation, Zhang Weichun and others compiled the feasibility study report of the technological transformation project with false information, while Wumart Group did not have the conditions to implement logistics projects and information projects. (3) The project is false. After Wumart Group obtained the treasury bond discount funds, it did not implement the approved logistics projects and information projects, but used the funds for daily operations. The Supreme Court retrial, however, held that:(1) the relevant policy documents did not prohibit private enterprises from participating in the declaration of the national debt technical reform discount project, Wumart Group as a private enterprise has the qualification to declare, its declaration in the name of Chengtong Company's subordinate enterprises, did not make the competent department responsible for examination and approval of the wrong understanding. (2) The logistics projects and information projects declared by Wumart Group are not fictitious. The failure to implement the project as planned after approval and the failure to lend were due to objective reasons and had been implemented off-site. Although the "Feasibility Study Report" is untrue, it is not enough to deny the feasibility and authenticity of the project. (3) Wumart Group used 31.9 million yuan of treasury bonds to repay other loans of the company after obtaining the discount fund for technological transformation. However, it has always been listed as a payment due to the people's government in its financial accounts and has not used deceptive means to conceal or embezzle it. Moreover, Wumart Group has the ability to return the fund at any time. Therefore, Wumart Group's illegal use of 31.9 million yuan of treasury bonds for technological transformation discount is not fraudulent acts.

In the same case facts, the Supreme Court gave a completely different trial result from the 1. court of second instance in the retrial. The Supreme Court believed that the behavior of Zhang Intermediate and others was a kind of civil fraud rather than criminal fraud. The reason for this is that the two levels of courts have different legal judgments of the facts, and the crux of the problem is how to distinguish between civil fraud and criminal fraud. According to the judgment of Zhang's case and the related fraud cases, I believe that the two can be distinguished from the objective aspects of the content and degree of fraud and the subjective purpose of illegal possession of the perpetrator.

1. the contents of deception

Both civil fraud and criminal fraud are deceptive, but their deceptive content is different. With regard to Zhang's case, the Supreme People's Court held that Wumart Group's declaration of the national debt technical reform discount project in the name of a subsidiary of Chengtong Company was a fraudulent act in the name of the declaration, but Wumart Group did not conceal the identity of its private enterprise in the declaration materials, and the competent department responsible for examination and approval was clear about this. In addition, the "Feasibility Study Report" submitted by Wumart Group when applying for the logistics project also has untruths, but it is not enough to deny the feasibility and authenticity of the project, that is, this untruth is a partial and individual fact., Not a holistic fact. In judicial practice, the content of deception is aimed at individual, partial facts or holistic facts, which is an important indicator for the court to evaluate the nature of the perpetrator's deception. For example, in the case of Kong Zhuqing's fraud in 2016 ((2016) E 2802 Xing Chu No. 29), the Lichuan Municipal People's Court held that the defendant Kong Mou subjectively used some false propaganda for the purpose of making money, and objectively used the method of shoddy and deliberately concealing the real situation to induce the other party to make a wrong expression of intention and to achieve certain benefits by performing the agreed behavior, his actions were civil fraud. Interestingly, after the Lichuan court made a verdict that Kong was not guilty, the procuratorate protested, so the second instance court further explained the difference between civil fraud and criminal fraud in the judgment. The second instance judgment of the case wrote: In the process of selling wooden coffins, Kong Zhuqing, the defendant in the original trial, violated the oral agreement between the two parties and concealed the truth that the coffins sold were connected and pieced together with nails, resulting in the wrong understanding of the other party to buy the coffin, resulting in damage to the interests. However, in the process of processing and selling coffins, Kong Zhuqing, the defendant in the original trial, bought wood, hired carpenters for processing, and handled timber transportation certificates, plant quarantine certificates and other certificates during transportation. Subjectively, he did not intend to illegally occupy other people's property. His behavior of concealing the truth when selling coffins in order to earn more benefits does not meet the constitutive requirements of the crime of fraud and does not constitute the crime of fraud.

The author believes that the distinction between civil fraud and criminal fraud should first be analyzed from the content of fraud. If the perpetrator deceives the overall facts, the perpetrator has no willingness and behavior to perform the agreed matters, but only wants to occupy other people's property without consideration through deception, which should be regarded as criminal fraud. If the perpetrator only deceives individual and partial facts in the agreed matters, such as quality, quantity, subject, guarantee, etc., but the actor ultimately performed the contract, it is a civil fraud.

The extent of 2. deception

Both civil fraud and criminal fraud use deception, but the degree of deception of the victim is different. The deception of the actor in criminal fraud has reached the level of causing others to misunderstand and dispose of property, while the actor in civil fraud uses deception., But others did not fall into the wrong understanding, let alone dispose of property because of the wrong understanding. In the case of Zhang Wenzhong, although Wumart Group declared in the name of a subsidiary of Chengtong Company, the examination and approval department was clear about the nature of Wumart Group's private enterprises and did not approve them as state-owned enterprises. That is to say, Wumart Group's deception did not lead the former State Economic and Trade Commission personnel in charge of examination and approval into a wrong understanding and then made the decision to approve. In practice, there are many cases in which the perpetrator's deception did not lead others into a wrong understanding and then disposed of property to prevent the establishment of criminal fraud. For example, the Fuzhou Intermediate People's Court tried the case of He Moujia fraud in 2014 ((2014) Rong Xing Zhong Zi No. 851). The Fuzhou Intermediate People's Court believed that the victim in this case was the villagers of Shangxue Village, who questioned the authenticity of the contract provided by the appellant He Moujia from the beginning, he Moujia's behavior cannot make the villagers of Shangxue Village fall into a wrong understanding, cannot obtain property based on the wrong understanding of others, and does not meet the constitutive requirements of the crime of fraud. For another example, in the case of Yan's fraud in 2016 ((2016) No. 10 at the beginning of the punishment of E 0624), the Nanzhang Court held that the defendant Yan had committed two frauds, but when the staff of the Bureau of Land and Resources examined the application materials for changing the nature of land use submitted by Yan to the county government, it was found that Yan did not own all the land assets of the former Nanzhang Phosphate Plant, however, it did not verify Yan's application for change of land ownership, nature, area and bankruptcy liquidation of the enterprise. The staff of the bureau drafted a request for public transfer of the right to use the state-owned construction land of the original phosphate fertilizer plant, changing the fact that Yan had only part of the land use right and only part of the compensation, and explicitly proposed to allocate 2851200 yuan of compensation for the right to use the state-owned construction land to Lvyuan Feiye Company. The dereliction of duty by the staff of the bureau is the direct cause of the bureau's misunderstanding and "voluntary" disposition of property. Yan's fraud is not enough to make the land and resources department into a wrong understanding. Therefore, the behavior of a certain does not meet the elements of the crime of fraud.

Although the perpetrator uses deception to facilitate the transaction, the content of the deception is only the reference factor rather than the decisive factor for the victim when disposing of the property. The perpetrator also did not fall into a wrong understanding and then dispose of the property because of this deception, which can prevent the establishment of criminal fraud, and his behavior can only be identified as civil fraud; On the contrary, if the content of the deception reaches the extent that the victim falls into a wrong understanding and thus disposes of the property, the act shall be evaluated as criminal fraud.

3. purpose of illegal possession

In practice, the determination of the purpose of illegal possession generally adopts two methods: subjective direct determination and objective indirect presumption. If the evidence of the objective act is indeed sufficient and the perpetrator confesses to the purpose of his illegal possession, he may directly use the method of subjective direct determination to determine that the perpetrator has the purpose of illegal possession. In the case where the perpetrator does not admit that he has the purpose of illegal possession, it is necessary to use the method of indirect objective presumption to prove whether the perpetrator has the purpose of illegal possession subjectively through a series of objective evidence. In the Zhang case, the court found that the Wumart Group did not have the purpose of illegal possession mainly through the following four points.

1, behavior personnel pre-performance ability. If the perpetrator does not perform the realistic possibility of the relevant matters, still agrees with others on the relevant matters and acquires property, it can be directly presumed to have the purpose of illegal possession. Specific to the Zhang case, the court mainly examines whether Wumart Group has the realistic possibility of fulfilling the declared project before the declaration. Wumart Group is a large domestic circulation enterprise with strong economic strength and its own comprehensive supermarket and logistics base. It has invested a lot of money in the improvement of information system in daily operation. Therefore, Wumart Group has the ability to implement logistics projects and information projects before declaration.

2, the performance behavior in the behavior personnel, the ability to perform does not mean that there is a performance behavior, so it is necessary to examine whether the actor has actively performed related matters. After the declaration, Wumart Group signed the "Cooperation Agreement" with the Tongzhou District Government of Beijing for the logistics project, actively participated in the construction of the Tongzhou District Logistics Industrial Park, and entrusted the Environmental Impact Assessment Office of Tsinghua University to conduct environmental impact assessment; actively for informatization projects Apply for related loans to further improve the related work of informatization projects. Therefore, Wumart Group has a proactive performance in the filing process.

3. The actor's disposal of the acquired property. For the actor who implements criminal fraud, he would have wanted to obtain other people's property without consideration through fraud. Naturally, he would not perform relevant matters in accordance with the agreement, but would only squander, transfer, hide, embezzle, etc. the acquired property. After obtaining the discount funds, Wumart Group used the funds to repay the company's other loans, but did not use deception to conceal or embezzle them, but has always listed them as "amounts due to the people's government" in its financial accounts, and Wumart Group has the ability to repay the funds at any time. Therefore, it can not be because the Wumart Group violated the provisions of the special funds earmarked for government bonds, and found that it has the purpose of illegal possession and then identified as criminal fraud.

4. The reasons for the actor's failure to perform the agreed matters and the attitude after the event are generally divided into subjective reasons and objective reasons. If the actor fails to perform the agreed matters due to subjective reasons, it can be directly presumed that the actor has the purpose of illegal possession. However, if the actor fails to perform the agreed matters due to objective reasons, it is necessary to further analyze whether the objective reasons are sufficient to prevent the actor from performing the agreed matters, and whether the perpetrator has actively remedied and assumed the corresponding obligations after the emergence of the objective cause, and to prevent the loss from expanding. The reason why Wumart Group did not build a large-scale modern logistics center in Tongzhou District as originally planned was initially due to the delay of SARS, and then because the logistics industrial park in Tongzhou District was changed from the original lease to the required purchase, because the purchase was for Wumart Group. The investment cost was too high, and the two parties failed to reach an agreement. In addition, due to the inability to provide land and start procedures, the project failed to obtain loans. Even with these objective and irresistible factors, Wumart Group later established logistics centers in Baiziwan and other places. The Qingyang Intermediate Court also made a similar determination in the case of Yang Jizhong and Li Lin's fraud ((2014) Qing Zhong Xing Chu Zi No. 36) heard in 2014: the defendant Yang Jimou borrowed money from the victim Li Moumou at a high interest rate for securities and futures trading, but did not conceal the truth of stock trading from the victim Li Moumou when borrowing money, and the money borrowed from the victim was actually used for stock trading, yang Jimou returned Li Moumou's cash 236000 yuan through bank transfer and Li Moumou's 924000 yuan through online banking. Under the condition that all the borrowed funds have been lost, Yang Jimou and Li sold a residential building and raised 510000 yuan to return to Li, totaling 1.67 million yuan. The above facts show that the defendant Yang Jimou has been actively returning Li's money from beginning to end. For the remaining part of the money that has not been returned, Yang Jimou and Li jointly signed an iou to Li and are still trying to return it. The above is sufficient to show that the defendant Yang Jimou did not subjectively have the purpose of illegally occupying the victim Li Moumou's money. Therefore, the defendant Yang Jimou's behavior also does not meet the subjective elements of the crime of fraud.

In summary, the distinction between civil fraud and criminal fraud, can not be based solely on a fact to make a judgment, the need for comprehensive analysis and judgment of the whole case, focusing on the above three aspects of the gradual analysis and judgment, that is, to judge the objective aspects of the perpetrator's deception content and degree, and then analyze its subjective illegal possession purposes. In fact, the difference between the two is not clear, so for the deception that is difficult to distinguish, we should insist that there is no suspected crime, and make a favorable determination for the suspect and the defendant. This is not only the adherence to the current criminal policy, but also the adherence to the basic principles of criminal law.