SPC, SPP, MPS Opinion on Illegal Fundraising (investment scams)

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[Original Title: Opinion on Several Issues on the Applicable Law in Handling Criminal Cases of Illegal Fundraising]

High People's Courts of all provinces, autonomous regions and directly controlled municipalities, People's Procuratorates, Public Security Departments and Bureaus, military courts and procuratorates of the Liberation Army, and the High Court, procuratorate and public security department for the Xinjiang Uighur autonomous region Production and Construction Corps:

The following Opinion on several issues regarding the applicable law in handling criminal cases of illegal fundraising is hereby made on the basis of the Criminal Law and Criminal Procedure Law together with judicial experience, so as to resolve problems encountered in recent years by the public security organs, people's procuratorates and people's courts in handling cases of illegal fundraising, and in following the law to punish crimes such as the illegal collection of public funds and fraudulent fundraising.

I. On the issue of Administrative Determinations

Administrative determination of the character of illegal fundraising is not a mandatory procedure for a criminal case of illegal fundraising entering the criminal process. Where administrative departments have not made a determination of the character of illegal fundraising, it does not impact the investigation, prosecution and trial of criminal cases of ilegal fundraising.

Public security organs, people's procuratorates and people's courts shall determine the character of the case facts, and complicated cases where it is difficult to determine the character of the case, the determination of the relevant department may be considered, and a determination of the character made on the basis of the case facts and legal provisions.

II. On the issue of defining "Openly Promoting to the Public"

"Publicity aimed at the public" as used in item 2 of the first clause of Article 1 of the "Supreme People's Court Interpretation of Several Issues Regarding the Specific Application of Law in Criminal Cases of Illegal Fundraising", includes the use of any channel to transmit information on the collection of funds to the public, as well as clearing knowing that information of collecting funds will be spread to the societal public, or other such situation, but doing nothing to stop the situation.

III. On the Issue of Defining the "Societal Public"

The following situations are not conduct with the 'collection of funds aimed a specific targets' as used in the second clause of Article 1 of the "Supreme People's Court Interpretation of Several Issues Regarding the Specific Application of Law in Criminal Cases of Illegal Fundraising" and shall be found to be collection of funds from the societal public:

(1) Clearly knowing in the course of collecting funds from friends and family or within a workplace that friends, family or staff of the workplace will collect funds from unspecified targets, and doing nothing to stop it;

(2) For the purpose of collecting funds, pulling social personages into the work-unit and collecting funds from them.

IV. On the Issue of Handling Joint Crimes

Where providing help to others in collecting funds from the societal public and taking a fee such as a representation fee, commission, rebate, brokerage fee or deducting a percentage, constitutes a joint crime of illegal fundraising, it shall be pursued for criminal responsibility. Where the fees described above can be promptly returned, lenient punishment may be given in accordance with law, and where the circumstances are slight punishment may be excused and where the harmfulness is not large, it may be handled non-criminally.

V. On the Issues of Recovery and Disposal of Property Involved in the Case

Funds collected from the societal public are unlawful gains. Returns paid from funds collected from the societal public, such as interest or shares, as well as fee paid to those helping collect funds, such as representation fees, commissions, rebates, brokerage fees or percentage deduction, shall be recovered in accordance with law. Where participants in the fundraising have not yet had their capital returned, it may be reduced by the amount of any returns paid.

In any of the following situations, where publicly collected funds, or property they have been converted into, is used to pay off debts or transferred to others, it shall be recovered in accordance with law:

(1) where the other party collecting it clearly know that is funds or property described above;

(2) Where the other party obtained funds or property as described without charge;

(3) Where the other party obtains funds or goods described above for a price obviously below market value;

(4) The other party's collection of funds or property described above is tied to illegal debt or unlawful or criminal activities;

(5) Other situations where it shall be recovered in accordance with law.

Sealed, seized or frozen property involved in the case that is depreciating or expensive to keep and preserve, may be sold off or auctioned before the completion of the suit, in accordance with the relevant provisions. Remuneration received will be kept by the organ which sealed, seized or froze it and distributed together at the end of the case.

Property involved in the case which is sealed, seized or frozen should generally be returned to participants in the fundraising at the conclusion of the case. Where property involved in the case is insufficient to make full return, make returns in accordance with the ratio of participants' contribution to the fundraising.

VI. On the Issue of Collecting Evidence

Where during the handling of a case of illegal fundraising it is not possible to collect individual testimony from each participant due to objective limits on capacity, the participants' testimony that is already gathered may be taken together along with the lawfully collected and verified written contracts, bank account transaction records, accounting records and accounting books, fund payment vouchers, audit reports, internet digital data and other evidence, to comprehensively determine case facts such as the number of persons and amount of money involved.

VII. On the Issue of Handling Cases that Involve Civil Litigation

Where in cases of illegal fundraising that the public security organs, people's procuratorate or people's courts are currently investigating, prosecuting or trying, an individual or entity raises a civil lawsuit arising from the same facts in a people's court or applies for enforcement against property involved in the case, the people's court shall not accept it and send the relevant materials to the public security organ or the people's procuratorate.

Where people's courts in the process of trying a civil case or in conducting enforcement discover that there is suspicion of illegal fundraising, they shall rule to reject the case or suspend enforcement and promptly send the materials to the public security organ or procuratorate.

Where in the course of investigating, prosecuting or trying criminal cases of illegal fundraising, the public security organs, people's procuratorate or people's courts discover a civil case arising from the same facts, or that property which enforcement is being requested against is property involved in a case, it shall be promptly reported to the relevant people's court. Where upon review the people's court feels there is truly reason to suspect a crime, follow the preceding clause to reach a disposition.

VIII. On the Issues of Handling Cases Crossing Jurisdictions

Criminal cases of illegal fundraising that cross jurisdictions, on the foundation of clarifying the case facts, may be handled separately by different areas' public security organs, people's procuratorates and people's courts.

In criminal cases of cross-jurisdictional illegal fundraising that are being handled separately, property involved in the case shall be distributed according to a uniform plan.

Where workers at state organs violate provisions in the distribution of property involved in a case and it constitutes a crime of abuse of office, they shall be pursued for criminal liability.

fake fundraisingSupreme People's Court

Supreme People's Procuratorate

Ministry of Public Security

March 25, 2014

 

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