The main criminal in the digital collection fraud case was sentenced to 12 years in prison. Why is it so severe?

Source: Mankiw Blockchain Law

Introduction

Last week, the Shenzhen Intermediate People’s Court issued An article "Beware! The "Trap" of Digital Collections" briefly introduces the case of suspected fraud on a certain digital collection platform. The main criminal involved in the case, Chen, was eventually sentenced to 12 years in prison, because several of the cases that Lawyer Liu is currently representing were related to the client’s involvement in the data hiding platform (all of Lawyer Liu’s clients are currently on bail). See this After the case, the client and his family were unavoidably worried about the future direction of their case, so Lawyer Liu took this opportunity to analyze the judgment and put forward some of his own analysis of the defense of criminal cases involving Shuzang Platform based on the case facts disclosed by the Shenzhen Intermediate Court. and views.

01 Case Introduction

In June 2022, Chen established A The company (which did not apply for ICP) later developed Platform B to publicly sell a certain digital collection. It promoted through its WeChat official account that the collection sold on Platform B was limited and that it would make a guaranteed profit after investment ("guaranteed repurchase, stable appreciation") ). In July of the same year, the first collection was officially launched, with nearly 30,000 copies sold within a month. Afterwards, Chen opened the secondary market and cut leeks through inflated transactions and hype; from October to November of the same year, the website server was hacked by Chen. One stopped renewing, platform B was closed, and users were unable to withdraw cash and view purchased digital collections. Chen cashed out a total of more than 900,000 yuan from the platform. In December of the same year, Chen was arrested and brought to justice.

After trial by the court, the main reasons why Chen was found guilty of fraud were: first, Platform B did not have the corresponding qualifications; second, the collections sold by the platform did not have equivalent artistic and collection value; third, The method of issuance uses deceptive behaviors such as exaggerating values, promising guarantees, and giving away physical objects that cannot be fulfilled; fourth, there are pull orders and rat positions in secondary market transactions; fifth, Chen has illegal possession of other people's funds in both his subjective understanding and objective behavior The purpose is manifested in Chen withdrawing funds from the platform for personal consumption and repaying personal debts, being unable to refund the victim's losses after the incident, and closing the platform, causing customers to be unable to withdraw cash and view collections.

In the end, the court determined that Chen was guilty of fraud.

02 Why was Chen sentenced to 12 years?

Among the crimes against property, fraud and theft are the most common crimes, and they are also crimes with a low threshold for conviction. According to current standards, there are three levels of sentencing for fraud crimes: the first level, the amount of fraud is 3,000 to 10,000 yuan (provinces across the country can set standards within this range based on the economic development and public security situation of each province, Jiangsu, Zhejiang, Shanghai, Guangdong, Shenzhen The standard for filing a case in other areas is 6,000 yuan), which belongs to the "large amount" in the criminal law and can be sentenced to fixed-term imprisonment of less than 3 years, criminal detention, and surveillance; in the second level, the amount of fraud is 30,000 to 100,000 yuan (most In the third level, the amount of fraud is more than 500,000 yuan, which belongs to the "extremely huge amount" in the criminal law. ", may be sentenced to fixed-term imprisonment of more than 10 years or life imprisonment.

In other words, once the amount involved exceeds 500,000 yuan, the national unified sentencing standard starts at 10 years. In this case, the court did not disclose the final amount of money involved by Chen, but only said, "Chen cashed out." "More than 900,000 yuan." According to Lawyer Liu's practical experience, the amount involved in this case (money lost by the victim) must be far more than 900,000 yuan. In practice, some people will say that even if I am found to have committed fraud, I do not possess all of the money. I used part of the money for employee wages, renting houses for the company, paying company utility bills and property fees, returning the money to the victim, etc. This money can be used from Is it deducted from the amount involved? The answer is no. The standard for determining the amount of fraud in the crime of fraud is the amount of money defrauded by the perpetrator when the fraud is completed (succeeded). As for how to deal with the money after the fraud is obtained, it will at most affect the severity of the sentencing grade. Even if Chen in this case returns all the compensation , at most it is a lighter sentence within the category of fixed-term imprisonment of more than 10 years. In the absence of other mitigating circumstances (such as surrendering, meritorious service, etc.), it is impossible to break through the third level and directly reduce it to less than 10 years.

03 Key points of defense in the case involving Shuzang Platform

Lawyer Liu’s comments on NFT numbers I have written several articles on compliance in the collection industry, and in fact, I have mentioned the key points of defense for digital collection platforms involved in criminal offenses from different aspects ("What are the crimes when an NFT digital collection platform is involved in criminal offenses?" "Compliance Guide for NFT Digital Collection Business" "), interested friends, especially Shuzang entrepreneurs, can refer to it.

For fellow lawyers, defending criminal cases involving Shuzang platforms requires at least three dimensions of thinking: First, compliance thinking, that is, reviewing what compliance actions the platforms involved in the case have taken, such as There are no applications or filings for ICP, EDI, blockchain information services, art operations, online culture operations, auction operations, etc. The more complete these applications/registrations are, the stronger the platform’s awareness of compliance operations will be, and the more conducive it will be to criminals. The second is industry thinking. Defense lawyers must be very familiar with the common methods of China’s current data collection industry, so that they can better communicate effectively with the judicial authorities. For example, some public prosecutors believe that as long as the data collection platform is opened If they enter the secondary market, they will preemptively label the parties as "trailing money" or "cutting off leeks". At this time, lawyers must make reasonable arguments from the development model and current situation of China's entire data collection industry, and at least inform the judicial authorities and Not everyone who opens the secondary market is a "bad guy"; the third is legal thinking, and it must be the legal thinking of the data storage industry. How to prove that the data storage platform or boss meets the four constituent elements of the crime of fraud (the perpetrator fabricated facts, concealed The truth - the victim falls into a misunderstanding - the property is disposed of based on the misunderstanding - the perpetrator obtains the property, the victim loses the property) and evaluates the subjective presence and depth of the perpetrator's "illegal possession for the purpose". For example, on the premise that the platform meets compliance operations and the main source of losses for the victim (or rights defender) is the secondary market, then is the victim's loss caused by the platform? Even if it is caused by the platform (such as false propaganda) ), whether the property lost by the victim has reached the platform, etc. Once the answer is no, the lawyer must consider whether the case has the possibility of innocence.

In addition, it is also very important to defend the misdemeanor of the Shuzang platform after being involved in the crime. Compared with the crime of fraud, the crime of fund-raising fraud is a misdemeanor. For example, there are only two statutory penalties: more than 3 years and less than 7 years; For more than 7 years, the corresponding standards are that the amount of fund-raising fraud is more than 100,000 yuan and more than 1 million yuan. When the amount involved is less than 100,000 yuan, it does not constitute a crime if considered as a crime of fund-raising fraud; when the amount involved exceeds 1 million yuan, the sentencing for fraud is at least 11 to 12 years, and for fund-raising fraud it is 7 years. In addition, in fund-raising fraud cases, if the perpetrator can proactively return the stolen goods and compensate before the procuratorate provides public prosecution, thereby reducing the occurrence of damage, he can eventually be given a lighter or reduced punishment (this is very important!). The prerequisites for fund-raising fraud are "illegal fund-raising" + "illegal possession for the purpose". Specifically, fund-raising fraud requires the "illegality", "openness", "incentive" and "social" characteristics + behavior of illegal fund-raising. People have the subjective intention of illegal possession. When the above conditions are met, the defense lawyer can try to plead guilty to a lesser crime.

04 Conclusion

Lawyer Liu mentioned several Compliance operations in the Tibetan industry have long been an imminent event, and every Tibetan entrepreneur needs to be tight on compliance, especially criminal compliance. In any industry, once you are involved in prison, career failure is considered a minor consequence, but being imprisoned is a pain that can never be saved. There are risks in starting a business, and starting a business in Shuzang seems to be more risky. Therefore, it is very necessary for entrepreneurs to educate themselves or find a lawyer to understand how to do criminal compliance.