Author: Lawyer Chen, Shanghai
1. Fraud by fictitious sale object
The crime of fraud requires the satisfaction of the constituent elements of the purpose of illegal possession, fabricating facts and concealing the truth to cause the other party to have a wrong understanding, and defrauding the other party of property.
Contract fraud is defined in Article 224 of the Criminal Law as follows: Whoever commits any of the following acts, for the purpose of illegal possession, defrauds the other party of property during the process of signing or performing a contract, if the amount involved is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall be fined or fined alone; if the amount involved 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 ten years, and shall be fined; if the amount involved is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than ten years or life imprisonment, and shall be fined or have his property confiscated:
(1) Signing a contract with a fictitious unit or in the name of another person;
(2) Using forged, altered, or invalidated bills or other false certificates of property rights as collateral;
(3) Without the actual ability to perform, using the method of performing a small contract first or performing part of the contract to deceive the other party into continuing to sign and perform the contract;
(iv) absconding after receiving goods, payment, advance payment or collateral property from the other party;
(v) defrauding the other party of property by other means. The crime of contract fraud requires that the perpetrator, in the process of signing and performing the contract, adopts deceptive means such as fabricating facts and concealing the truth to defraud the other party of the contract of property.
Virtual currency mining machines are property in the sense of criminal law. The perpetrator fabricates and falsely claims to hold virtual currency mining machines for sale. Depending on whether he has signed a sales contract, it may constitute the crime of fraud or contract fraud. The amount of fraud loss is generally determined by the price paid by the victim.
Case 1: Contract Fraud Case of Xue Mou [(2018) Lu 0522 Criminal First Instance No. 41]
In July 2017, the defendant Xue Mou posted information online, falsely claiming that he could contact a batch of Ant S9 "Bitcoin" mining machines for sale. The victim Lu Mou wanted to buy from Xue Mou and paid a deposit of 100,000 yuan to Xue Mou through bank transfer on July 21. On July 24, the two signed a contract, stipulating that Lu Mou would purchase 122 Ant S9 mining machines from Xue Mou, each for 9,500 yuan, Lu Mou prepaid 70% of the payment of 811,300 yuan, and Xue Mou would deliver the goods between August 5 and August 15. On the day the contract was signed, Lu Mou prepaid 711,300 yuan to Xue Mou through mobile phone transfer. After the contract expired, the defendant Xue refused to deliver the goods and lied that he would give the payment of 618,000 yuan to "Zhang from Guangzhou" who supplied the goods to him. Later, he lost contact with "Zhang" and could not perform the contract. On September 1, 2017, Xue returned 70,000 yuan to Lu and defrauded Lu of 741,300 yuan. The court held that: The defendant Xue had the subjective purpose of illegally occupying the victim's property and had the intention of fraud. First, the defendant Xue did not have the ability to perform the contract from the beginning. Xue said that the mining machine came from "Zhang", but Xue and "Zhang" had no written contract, no receipts, no payment vouchers, and did not know whether "Zhang" had the goods, and could not remember the negotiation process with "Zhang". Although Xue claimed that he contacted "Zhang" through WeChat, he could not find "Zhang" from the WeChat contacts of his mobile phone recovered by the investigation agency. Xue provided the victim Lu and the investigative agency with a false mobile phone number of "Zhang" in an attempt to block verification with "Zhang". The above circumstances show that Xue did not buy the mining machine from "Zhang" and had no source of goods. Second, the defendant Xue engaged in deception in the process of signing and performing the contract. During his contact with the victim Lu, Xue rented a Mercedes-Benz sedan and claimed that it was purchased by himself, giving the victim the illusion of strong financial ability; he fabricated the source of the mining machine to the victim as a debt in kind, and then when he was asked to pay for the goods, he said that the money would be paid to the upstream supplier; he provided the victim with a false mobile phone number of "Zhang". Third, the defendant Xue had no intention of performing the contract. First, An confirmed that Xue had the idea of first defrauding Lu of the payment for the goods, and then using the payment to resell the mining machine to make a profit and then pay back the money. Secondly, Xue has never lived a rich life and had no large income, but he rented a Mercedes-Benz car at a daily rental price of 1,100 yuan; from the end of July to September 1, 2017, he spent 116,350 yuan on car rental, paid 30,000 yuan to Tian, concealed 200,000 yuan, and returned 70,000 yuan to Lu, totaling 416,350 yuan. Xue's above-mentioned behavior occurred after receiving 811,300 yuan from Lu. Based on this, the defendant Xue had no ability to pay 618,000 yuan to "Zhang" and had no intention of performing the contract with Lu. In summary, the defendant Xue, for the purpose of illegal possession, had no actual performance ability, and in the process of signing and performing the contract, defrauded the other party of property in a huge amount. His behavior constituted the crime of contract fraud and should be punished according to law.
2. Quality defects and breach of delivery deadline
Whether the quality defects and breach of delivery deadline in the virtual currency mining machine sales contract can be identified as fraud is a difficult point in practice. The fraudulent content of contract fraud is aimed at the main contract terms, that is, the perpetrator uses the signing of the contract as a means, but has no intention to perform the obligations at all, or the perpetrator first performs part of the contract obligations, deceives the contract counterparty to perform the obligations, and then the perpetrator no longer performs the contract obligations and illegally takes the acquired property for himself. In addition, the perpetrator of contract fraud must have the subjective purpose of illegal possession. In the process of determining the crime of contract fraud, the judgment of "illegal possession purpose" should be determined in combination with the following aspects:
(1) Whether the perpetrator has the ability to perform the contract. Whether the perpetrator has the ability to perform the contract is an important basis for judging the nature of fraud. If the perpetrator does not have the ability to perform the contract, but signs a contract with others by fabricating facts and illegally possesses the property of the other party, he should be convicted of contract fraud.
(2) Whether the perpetrator illegally possesses the property of others. If the perpetrator obtains the property of others by fabricating facts but cannot prove that he has the purpose of illegal possession, the perpetrator's behavior of holding the property of others based on the agreement of the contract is not illegal possession. However, if the perpetrator does not intend to perform the contractual obligations after controlling the property of others, or conceals the property by transferring the property, it can be determined that he has the purpose of illegal possession.
(3) The circulation of property. After the perpetrator obtains the property of others, it should be judged whether the perpetrator has the purpose of illegal possession based on the circulation of the property. If the perpetrator squanders, conceals, or absconds with the money after obtaining the property, it can be determined that he has the purpose of illegal possession. After the actor obtains the property, he performs the corresponding obligations in accordance with the contract and reasonably plans the use of the funds, which can prove that the actor has the subjective intention to perform the contract and does not have the purpose of illegal possession.
To sum up, the quality defects and delivery deadline breach in the sale of virtual currency mining machines should be judged based on whether there is objective behavior of fabricating facts to conceal the truth and whether there is subjective illegal possession. For example, in practice, it often happens that the mining machine sold by the actor has serious quality problems and the parameters are seriously inconsistent. After the buyer questions it, he argues that the wrong goods were sent. In this case, it is necessary to consider whether the seller is negligent or intentional. For example, it is difficult to explain that it is negligent to send the wrong goods to all buyers. In the case of futures trading, the dealer as the seller does not place an order to the upstream but misappropriates the buyer's mining machine money, or only places an order to the upstream for part, delivers part as agreed, and delays the delivery of the rest. The ability to perform is delayed, and the upstream cannot deliver the goods as an excuse, which is not just a civil breach of contract, but involves criminal fraud. The boundary between civil fraud and contract fraud is relatively vague, which is also a difficult point in practice. It should be analyzed in combination with the specific case.
If the seller of virtual currency mining machines has the above-mentioned behavior, the buyer can file a criminal complaint with the public security organ of the place where he belongs. If the public security organ does not file a case, he can apply for reconsideration, apply for procuratorial supervision to the People's Procuratorate, or file a private prosecution with the People's Court.
3. Legal provisions for criminal complaints
Criminal Procedure Law of the People's Republic of China:
Article 110 Any unit or individual who discovers a criminal fact or a criminal suspect has the right and obligation to report or report to the public security organ, the People's Procuratorate or the People's Court.
The victim has the right to report or accuse the criminal fact or criminal suspect that infringes on his personal and property rights to the public security organ, the People's Procuratorate or the People's Court.
The public security organs, people's procuratorates or people's courts shall accept reports, accusations and reports. If the case is not under their jurisdiction, they shall transfer it to the competent authority for handling and notify the reporter, accuser and reporter; if the case is not under their jurisdiction but emergency measures must be taken, emergency measures shall be taken first and then transferred to the competent authority.
Where the criminal surrenders himself to the public security organ, people's procuratorate or people's court, the provisions of the third paragraph shall apply.
Article 111 Reports, accusations and reports may be made in writing or orally. The staff who accepts oral reports, accusations and reports shall make a record, which shall be signed or stamped by the reporter, accuser and reporter after it is read aloud and found to be correct.
The staff who accepts accusations and reports shall explain to the accuser and reporter the legal liability for false accusations. However, as long as the facts are not fabricated or evidence is not forged, even if the facts of the accusation or report are inconsistent or even wrong, they must be strictly distinguished from false accusations.
The public security organs, the people's procuratorate or the people's court shall ensure the safety of the reporter, accuser, reporter and their immediate family members. If the reporter, accuser or reporter does not want to disclose his or her name and the act of reporting, accusing or reporting, he or she shall be kept confidential.
Article 112 The people's court, the people's procuratorate or the public security organ shall promptly review the materials of the report, accusation, report and self-surrender according to the scope of jurisdiction, and shall file a case if it is considered that there is a criminal fact and criminal liability needs to be investigated; if it is considered that there is no criminal fact or the criminal fact is obviously minor and no criminal liability needs to be investigated, the case shall not be filed and the accuser shall be notified of the reasons for not filing the case. If the accuser is dissatisfied, he or she may apply for reconsideration.
Article 113: If the People's Procuratorate believes that the public security organ has not filed a case for investigation that should be filed, or if the victim believes that the public security organ has not filed a case for investigation that should be filed, and submits a complaint to the People's Procuratorate, the People's Procuratorate shall require the public security organ to explain the reasons for not filing a case. If the People's Procuratorate believes that the reasons for the public security organ's failure to file a case are not valid, it shall notify the public security organ to file a case, and the public security organ shall file a case after receiving the notification.
Article 210 Private prosecution cases include the following cases:
(1) Cases that are handled only upon complaint;
(2) Minor criminal cases for which the victim has evidence;
(3) Cases in which the victim has evidence to prove that the defendant’s acts of infringing upon his or her personal and property rights should be investigated for criminal responsibility according to law, but the public security organ or the people’s procuratorate does not investigate the defendant’s criminal responsibility.
Article 211 After reviewing a private prosecution case, the people's court shall handle it according to the following circumstances:
(1) Cases where the criminal facts are clear and there is sufficient evidence shall be tried in court;
(2) In private prosecution cases where there is a lack of evidence of guilt, if the private prosecutor cannot provide additional evidence, the people's court shall persuade the private prosecutor to withdraw the private prosecution, or rule to dismiss the case.
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