Six questions about ＂victims＂ of fund-raising fraud

As we all know, fund-raising fraud crimes have occurred frequently in China in recent years. Because most of the victims of such crimes are not one or two people, but often more than a dozen, dozens or even hundreds, fund-raising fraud is often a major case that is deeply concerned by public opinion. From the legal profession to the public, people all advocate hell to pay for the crime of fund-raising fraud. In response to this public opinion, China’s current Criminal Law has no mercy on this kind of stakeholder economic crime. In the past, many defendants were sentenced to death for this crime. Fortunately, in August 2015, the National People’s Congress amended the Criminal Law, abolishing the original Article 199, the controversial provision of the death penalty for fund-raising fraud, which became history.

However, the victims of fund-raising fraud are really innocent? Are all fund-raisers suspected of fund-raising fraud culpable of punishment and heinous? In fact, in the process of the crime of fund-raising fraud, even if the victim’s attitude does not play a decisive role in the final criminal result, it will greatly affect the occurrence of real harmful consequences. Hans von Hentig (1887 -1974), a pioneer of German criminology, once pointed out: "The victim must be regarded as one of the decisive factors, and an evil symbiotic relationship is usually established between the perpetrator and the victim."

Indeed, only by placing the behavior of the fund-raising fraudster in the symbiotic relationship of interaction with the victim can we truly understand the truth of the case. This will be described in detail below.

On the afternoon of January 18th, 2012, the Higher People’s Court of Zhejiang Province issued a second-instance judgment on the case of the defendant Wu Ying’s fund-raising fraud, ruled that the appeal of the defendant Wu Ying was rejected, upheld the death sentence of the defendant Wu Ying, and reported it to the Supreme People’s Court for review according to law. Vision china data map

1. Is the victim an unspecified public?

According to the Supreme People’s Court’s judicial interpretation, the crime of fund-raising fraud is objectively manifested as illegally raising funds from the public. In the theory of criminal law, in order to establish the crime of fund-raising fraud, the victim must be the public who belongs to an unspecified object, otherwise, it is not enough to be recognized as a crime of fund-raising fraud. However, in judicial practice, the victims are often not unknown public or strangers, but most of them are specific local acquaintances. Empirical research shows that illegal fund-raising is mostly among acquaintances, and the suspects are mostly local people. Most of the suspects are local acquaintances, which inevitably means that the suspect and the victim are acquaintances, that is, the victim is not an unspecified public.

For example, in the case of Wu Ying in Dongyang, Zhejiang Province, 11 victims who provided funds to Wu Ying maintained close contacts with Wu Ying for many years. These people not only do not belong to the public, but also are professional usurers. Another example is the "Zhang’s fund-raising fraud case" in Wenzhou, Zhejiang Province. The victims are all relatives, friends and personal friends of Zhang, not the public. Another example is Wang Liuming’s fund-raising fraud case in Xianning, Hubei Province. Most of the victims are Wang Liuming’s relatives and friends, and their internal employees. There are countless cases in which such victims are not the general public.

A large number of fund-raising fraud cases show that a considerable proportion of victims and fund-raisers belong to acquaintances such as relatives, colleagues, classmates, comrades-in-arms and friends.. Our country belongs to a typical acquaintance society, and the fund lending activities between relatives and friends have existed since ancient times and are flourishing today. The legislative norms of the crime of fund-raising fraud will undoubtedly not violate the traditional folk lending customs and criminalize it. Otherwise, the legislative norms prohibiting illegal fund-raising will be artificially "upgraded" to the referee norms prohibiting free lending between relatives and friends. When judging the victims of fund-raising fraud, we should not simply count the heads. The most important thing is to start with the relationship between fund-raisers and victims, and exclude relatives and friends from the scope of victims of fund-raising fraud. Only in this way can we meet the legislative intent of fund-raising fraud and not expand the scope of application of fund-raising fraud.

Second, do the victims belong to social vulnerable groups?

Successive governments have always insisted on cracking down on fund-raising fraud. In addition to the overriding "maintaining stability" law enforcement thinking, another important basis for sticking to these positions is that the victims belong to the socially disadvantaged groups and need strong protection from criminal law and criminal justice. For example, in 2007, the General Office of the State Council issued the Notice on Punishing Illegal Fund-raising in accordance with the law (Guo Ban Fa Dian [2007] No.34), which emphasized that illegal fund-raising seriously harmed the interests of the masses, causing heavy losses to the victims (mostly laid-off workers and retirees), easily triggering mass incidents and even endangering social stability.

Is this really the case? The field of private finance belongs to the patent of the rich, and it is almost impossible for the socially disadvantaged groups who have no surplus funds and are still struggling for bread or house to become the targets of fund-raising. It is a small probability event that they become victims of the crime of fund-raising fraud, which is not representative. In other words,Most of the victims of fund-raising fraud are people who get rich first.Among them, "local tyrants" also abound.

For example, in Wu Ying’s case, only 11 people lent money to Wu Ying, and they successively lent Wu Ying as much as 770 million yuan. If these victims are also socially vulnerable groups, who else is not? Another example is in the fund-raising fraud case of Wang Ying and Li Moujia in Inner Mongolia. The victims were ten people including Wang Moujia, and the funds they lent to the defendant totaled 8,826,765 yuan, with an average of more than 880,000 yuan. In Inner Mongolia, where the economy is still underdeveloped, people who can raise 880,000 yuan can’t be regarded as social vulnerable groups in any case.

In real life, there are indeed some middle-aged and elderly people who spend half their hard savings to participate in illegal fund-raising and eventually become victims. We "mourn their misfortune" for such people, but we still should not regard them as social vulnerable groups. After all, people who have savings of tens of thousands, hundreds of thousands or even hundreds of thousands of yuan may not be economically strong, but they are undoubtedly not socially weak who need criminal law (rather than other laws) to protect them.

It is unfair to use the most severe criminal law to protect the victims of fund-raising fraud, even if all of them belong to the vulnerable groups in society. After all, once this happens, the criminal law will become an unequal law that favors the victims but imposes excessive sanctions on fund-raisers.

Third, can the victim protect himself?

When discussing the role of victims, Bernd Schünemann, a contemporary German criminal jurist, pointed out: "The principle of necessity and propriety of criminal law requires the prevention of social harm. When victims intentionally neglect their own interests, which leads to social harm, it is inappropriate to apply penalties. In the case of fraud, when the victim realizes that the criminal’s claim may be untrue or even wrong, his interests should not be protected by the criminal law, even if he only suspects. " In short, the victim’s self-protection should take precedence over criminal law protection. Only when the victim’s self-protection becomes impossible, and the civil and administrative laws and regulations are not enough to protect the victim, can the "criminal law" be sacrificed.

A basic common sense is that the success of fund-raising fraud can not be achieved without the interaction between the offender and the victim and the victim’s actions, and this interaction and actions are due to the victim’s independent decision and voluntary action. Otherwise, what the criminal suspect commits in criminal law is not the crime of fund-raising fraud, but may be other crimes such as robbery, embezzlement and extortion. When fraudulent acts such as fictitious use of funds by fund-raisers do not make the victims fall into misunderstanding, and the main reason for the victim’s investment is the high return on investment brought by the investment, then the victim’s investment should be regarded as financial speculation in the usual sense. For this kind of financial speculation initiated by fund-raisers, the victims can completely decide whether to participate, and when they decide to contribute, they have sufficient self-protection ability for their financial security. It is undoubtedly debatable whether the criminal law should protect and relieve the economic crimes that the victims can protect themselves afterwards.

First of all, the ex post protection and relief of criminal law is suspected of improper intervention in the victim’s property investment (speculation). In order to seek high returns, it is common for victims to invest and speculate with their own funds in the modern market economy era, which does not infringe on the rights and interests of others and social order. This kind of self-determination behavior belongs to the category of free development of personality and is recognized and guaranteed by China’s Constitution. Therefore, the victim should not make a legal evaluation whether he is investing or speculating, and the criminal law should especially remain silent rather than actively intervene.

Secondly, intervention may bring adverse consequences of property damage. Punishing fund-raisers for fund-raising fraud is not only unhelpful to the victims, but may also be harmful. Because the financial market is turbulent and changing rapidly, if the fund-raiser is not convicted and sentenced, the possibility of a turnaround and a comeback completely exists, that is, it is not impossible for the victims to get all the money back overnight. In judicial practice, many victims have issued Criminal Understanding on their own initiative, saying that they don’t want fund-raisers to be imprisoned. Some victims have openly resisted the investigation by public security organs, and even put pressure on the investigation organs in the form of petitions, opposing the relevant departments to use the Criminal Law to interfere with their speculative fund-raising behavior. Why is the victim like this? Isn’t it worth pondering and introspection by legislators, prosecutors and judges?

It has been nearly forty years since China started the market economy model, and the concept of risk has long been as deeply rooted in people’s hearts as the market concept. Even if ordinary people go to a securities company to open an account, they will be told that "the stock market is risky and they need to be cautious when entering the market".The vast majority of victims of fund-raising fraud belong to well-informed people who get rich first. They can’t be ignorant of the risks of high-interest loans and financial speculation, even if they don’t fully understand them.. The victims have full capacity for civil and criminal responsibility, and our Criminal Law should regard them as ordinary people who enjoy human dignity, rather than specific people who can’t make their own decisions and take responsibility for themselves. Their financial speculation in pursuit of high returns is self-trapping, so law enforcers don’t have to expand and explain the crime of fund-raising fraud in the Criminal Law, and rashly intervene with strong force.

Fourth, is the victim cheated because of misunderstanding or self-trapped risk speculation?

If the fundraisers had always kept their money as tight as jade in the face of the high return on funds and the extreme lure of getting rich overnight, they would not have become victims later. The victim’s voluntary speculation (investment) in his property is a basic condition for the crime of fund-raising fraud to be completed. The problem is that this kind of voluntary investment (speculation) is driven by risky speculation because of misunderstanding. In the case of fund-raising fraud, even if the victim has a misunderstanding, it is not limited to the blueprint for return advocated by the fund-raiser, but more is the lack of understanding of the consequences of risky speculation. The latter has nothing to do with fund-raisers, and should be mainly attributed to the victims themselves.

According to the general theory in academic circles, the basic structure of the crime of fraud is "committing fraud → the relative person is caught in a misunderstanding → delivering the property due to the misunderstanding → the fund raiser or the third party obtains the property → the property consignor or the third party loses the property". The crime of fund-raising fraud is just a crime of fraud involving illegal fund-raising, and its basic structure is no different from that of ordinary fraud.

The complexity of the crime of fund-raising fraud lies in that the fund-raiser commits fraud, which does not necessarily lead to the victim’s misunderstanding, nor does it mean that the victim’s surrender of property is the result of fund-raiser fraud. As mentioned above, most of the victims and fund-raisers are acquaintances of relatives and friends, and they are all quick-witted people who get rich first, which means that the victims did not deliver the funds to the fund-raisers in "veil of ignorance (or ignorance)". On the contrary, they are not ignorant, if not clear, of basic information such as who the fundraiser used to be and what he is doing now. As a relationship crime that often occurs among acquaintances, it is difficult, even impossible, for fund-raisers to completely keep the victims in the dark. Judicial cases show that most victims are not caught in a misunderstanding because of the fraudulent behavior of fund-raisers, and the reasons for their final decision to deliver their property are complicated and their motives are diverse. It is arbitrary to blame all the related behaviors on the cognitive errors of the victims.

For example, in Wu Ying’s case, when the investigator asked the victim "Why did you lend money to Wu Ying", the victim replied: "The main reason is to make some money, and the other reason is to consider the true colors (quote: Wu Ying is the legal representative of Zhejiang Bense Holding Group). She is very famous, and I think she can help me in the future when she develops." In the face of the victim’s confession, what reason does the case-handling personnel have to judge that Wu Ying, the fund-raiser, has committed fraud? How dare you say that the victim disposed of his property because he was deceived by Wu Yingzhi and fell into a misunderstanding? It is no wonder that a funder once asked the reporter of the Wu Ying case, "Why do you think I will be cheated?" And told reporters: "Why should I hate Wu Ying? I chose to lend money to Wu Ying, and I didn’t see it! I don’t agree that she is a liar. The risks we understand are different from those you understand. "

Another example is in the crime of fund-raising fraud committed by Wang Ying and Li Moujia. According to Qin Moumou, one of the victims, the reasons for borrowing money are as follows:

In June, 2007, Wang Ying rented an office in a hotel and prepared to start a company. Qin worked on the same floor with him, and it felt good to get acquainted. Wang Ying said that he needed funds. In 2008, Qin went to his office and sent 200,000 yuan, with a monthly interest of 3.5%. The interest has been paid in full. In March, 2009, Wang telephoned to ask for money, and I sent another 200,000 yuan, with a monthly interest of 3.5%. This year’s interest is paid in full. On March 23, 2009, I made an IOU for this 400,000 yuan. The interest was not paid until March 2010, and the total interest was about 250,000 yuan, but the principal was not paid. Now I still owe 400,000 yuan in principal and 266,000 yuan in interest.

Who can see that there are fund-raisers’ fraud and victims’ misunderstanding from the explanations of "I feel good after meeting each other", "I sent 200,000 yuan when I needed money for telephone contact" and "I made an IOU for this 400,000 yuan"? If it is concluded that the victim Qin Moumou’s behavior of delivering 200,000 yuan twice was due to a misunderstanding, I am afraid that Qin Moumou himself did not believe it.

Similar fund-raising fraud cases without fund-raiser fraud and victims’ misunderstanding can be found everywhere in judicial practice. When the victim delivered his funds, he was either uninterested in whether the fund raiser invented the use of the funds and produced false documents, or he was highly suspicious but decided to deliver the funds. Because of the high return on capital and the temptation to get rich quickly, as well as other imaginary benefits, they have already moved their hearts.The investor’s speculative mentality of taking a risk is the internal cause of their final victim, and there is a close relationship between their murder and their misunderstanding.. This kind of risk-taking victim, driven by financial speculation, is not surprising in the case of fund-raising fraud.

In this risky gambling game, speculation is not an exclusive mentality of fund-raisers, but an interdependent and intertwined relationship. When the victim takes advantage of the fund raiser’s adventure, it must mean that the victim’s adventure is taken advantage of by the fund raiser. There are basically no problems of fraud and misunderstanding. Both victims and fund-raisers are captured by speculative impulse and desire to get rich, and both of them intentionally or unintentionally trap themselves in risks. The truth is nothing more than this.

Most fund-raising fraud cases belong to private high-interest loan disputes that are not protected by law. The victim’s speculative and greedy psychology is the internal cause of the repeated prohibition of high-interest loans, and the fund-raisers who seem to be the perpetrators actually eventually become victims. In such cases, the boundary between the victim and the fundraiser is blurred, and the defendant (fundraiser) is also the victim. In the case of fund-raising fraud, it is rare to hear that the victim’s misunderstanding is caused by fraud, while the common speculative psychology and tacit mutual use are open secrets.

V. Do the victims really need criminal law protection??

In the crime of fund-raising fraud, the high rate of return on funds is the yeast eventually caused by the actual harm. The victim was not so much deceived by "fictitious use of funds" and "false documents" as attracted and moved by the high rate of return. Rate of return on capital obviously exceeds the interest rate of similar loans of banks by four times, which is quite common in fund-raising fraud cases, and the rate of return is close to or even over 100%. According to the relevant judicial interpretation in China and the regulations of the People’s Bank of China, if the rate of return exceeds four times the interest rate of similar loans of banks, it belongs to private lending that is not protected by law and justice, and can be characterized as illegal high-interest lending.

In other words, the victim lends a large amount of money to the fund-raiser for a high rate of return that obviously exceeds the legal standard (note: it is quite common for the victim to lend money to the fund-raiser repeatedly, but not only once), and its behavior itself is not legal and is not protected by law. In this case, after that, protecting the victims with the help of the Criminal Law, which has a far-reaching impact on the freedom and property of fund-raisers, is it not to use criminal law to protect illegality?

Finance is the blood of modern market economy. At present, China’s financial market is basically in a closed state of government monopoly, and it is difficult for private enterprises and entrepreneurial groups to raise funds. This is the institutional reason why private lending, high-interest lending and underground banks are extremely active. The existing research shows that only by revising and perfecting the relevant financial legal system in China, affirming the financing function of private lending and reserving legalization space for private finance can private lending and illegal fund-raising be effectively regulated.

In this sense, in order to truly protect the victims of fund-raising fraud cases, the radical solution is to amend China’s "Commercial Bank Law", "Securities Law" and other financial laws, so that private financing and financial behavior can be legally followed, rather than explicitly prohibiting and severely cracking down as it is now. Illegal fund-raising is becoming more and more serious in our country, and trying to protect the victims with the high-pressure punishment of fund-raising fraud is counterproductive in the end. Criminal judicial practice has repeatedly proved that the Criminal Law is really unbearable for the property protection of victims of fund-raising fraud. More importantly,Victims of fund-raising fraud don’t need the protection of the Criminal Law, and the application of civil tort and fraud laws may better protect them..

6. Should the victim who is trapped in the risk be responsible for the actual harmful results?

In fact,Compared with the victims of ordinary fraud, the victims of fund-raising fraud should bear greater responsibility for the risk of self-trapping, and should not be specially protected by the Criminal Law.. Because in the process of fund-raising fraud, the fund transactions between victims and fund-raisers are generally evidenced by IOUs, or loan agreements are signed, and some even use other property as collateral to ensure the safety of lending. From a legal point of view, the relationship between civil creditor’s rights and debts is determined by their capital transactions, and its legitimacy is unquestionable, for one thing.

Second, the victims lend large sums of money to fund-raisers, and it is common to borrow many times at different times, in order to seek high interest rate returns that are prohibited by relevant laws. In essence, they invest and speculate by borrowing, but only rely on the indirect investment of fund-raisers. This characterization is enough to prove that the so-called fund-raiser has the purpose of illegal possession, which is actually derived from the result of investment failure and inability to repay the loan, and has nothing to do with objective facts. An important reason why this kind of investment and speculation in the form of high-interest loans has been repeatedly banned and prevailed among the people for a long time is, of course, that there are risks of failure, but there are more successful cases.

Imagine, if every investor, that is, the victim, loses in the end without exception, how can this kind of high-interest loan investment last forever in civil society? However, the law enforcers turned a blind eye to the success of the loan-based investment-there is no precedent for the successful investment and the fund raiser being investigated for criminal responsibility. But once the investment fails, the law enforcers will ask the fundraiser. How can law enforcers be so successful and defeated? Investors can make a profit of Qian Qian by investing successfully with the help of fund raisers; Once the investment fails, criminal law enforcement will recover the principal for it. To some extent, the investor, that is, the victim, always takes advantage of high returns without taking any risks, which obviously violates the law of equal risk and return in the financial investment market. In this way, the crime of fund-raising fraud can not only effectively regulate and control private high-interest loans, but also clearly encourage people to enter such investment (speculation) fields without taking any risks. The introduction of the crime of fund-raising fraud has not suppressed the high incidence of private high-interest loans at all, which is the best proof.

There is no doubt that the victims of high-interest loans have a clear understanding of the risks of lending behavior. After all, the vivid examples of high-interest loans that are hard to return in the end are always reminding them that high-interest loans are risky and funds should be cautious. Most borrowers use the borrowed funds for investment and operation, with the exception of a few cases where the borrowed funds are used for acts prohibited by criminal law. Rather, the borrower, that is, the victim, can immediately withdraw funds from the borrower after realizing the risk to eliminate the risk. However, the reality is that after the victims have tasted the "sweetness" of high-interest loans, they often add capital to fund-raisers, completely ignoring the common sense of investment (speculation) that the more capital is invested, the greater the risk. The purpose of the victim’s lending is to get high returns, and whether he can finally get high rate of return on capital depends entirely on the success or failure of the fund raiser’s investment and management. To some extent, the investment and operation of fund-raisers can be understood as "helping" victims to achieve high return on funds. However, all investments and operations are likely to fail, and the principal may be wasted, let alone a high rate of return, which is often not decided unilaterally by fund raisers.

VII. Conclusion

In a word, the vast majority of victims have enough knowledge of the risk of self-trapping, and it is impossible to ask borrowers to succeed in their investment and management. Once it fails, it will be served by the Criminal Law, which makes no sense in jurisprudence.

Without the victim’s delivery of his property, that is, the victim does not fall into the risk, the so-called fund-raising fraud crime is simply impossible to succeed.Regardless of the victim’s voluntary delivery, that is, the right to self-determination, such legislation is undoubtedly paternalistic.. Patriarchal system is not the protector of freedom, on the contrary, it hinders and threatens freedom to a great extent. Isaiah Berlin (1909-1997), a British thinker, once said that paternalism is "the greatest authoritarianism imaginable". This is because paternalism does not treat people as free people, but regards them as materials for benevolent reformers to shape people according to themselves rather than their free intentions.

John Locke (1632-1704), an enlightenment thinker in modern England, pointed out: "At best, the law only protects citizens’ property and health from fraud and violence by others, but it can’t guarantee that the owners themselves will not be careless or mismanagement of property. Whether a person likes it or not, no one can force him to be rich or healthy. No, God himself will not save people against their wishes. "When legislators impose severe laws on fund-raisers in the name of protecting victims, don’t forget that victims are not innocent. Without their thoughtless care and risky speculation on their property, how can fund-raisers collect a lot of money? Who can say that the fundraiser has no moral responsibility for the final failure of the fundraiser?

I’m afraid they don’t have the confidence to say how wronged they are as victims.