In recent years, cases of illegal fundraising have shown a high incidence and frequent occurrence, and the funds involved are generally huge, seriously undermining the order of financial management, infringing on the property safety of the people, and causing great harm to society. In order to improve everyone's awareness and prevention of illegal fundraising, this article summarizes several common legal issues of illegal fundraising for reference.
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What is the definition of illegal fundraising?What are the characteristics of illegal fundraising?
Illegal fundraising refers to the act of absorbing funds from unspecified targets without the permission of the financial management department in accordance with the law or in violation of national financial management regulations, by promising to repay principal and interest or giving other investment returns.
The "four sexes" characteristics of illegal fundraising:
1.Illegality, i.e., "absorbing funds without the approval of the relevant departments in accordance with the law or in the form of legal business";
2.Openness, that is, "public publicity to the public through the Internet, ** promotion meetings, leaflets, mobile phone text messages, etc.";
3.Inducement, that is, "a commitment to repay principal and interest or pay returns in the form of money, in-kind, equity, etc. within a certain period of time";
4.Sociality, that is, "absorbing funds from the public, that is, unspecified objects in society".
[Legal Index].Article 2 of the Regulations on the Prevention and Handling of Illegal Fundraising, and Article 1 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fundraising.
Entities of illegal fundraising and their respective responsibilities
"Illegal fundraiser" refers to the unit or individual that initiates, leads or organizes the implementation of illegal fundraising;An illegal fundraising facilitator is an entity or individual that provides assistance to the person who knows that it is illegal fundraising and obtains economic benefits.
Illegal fundraisers and fundraising facilitators shall return the fundraising funds to the fundraising participants.
For illegal fundraisers, the lead department for the disposal of illegal fundraising shall impose a fine of not less than 20% but not more than 1 time of the amount of funds raised. If the illegal fundraiser is a unit, it may also be ordered to suspend production and business according to the severity of the circumstances, and the relevant authorities shall revoke the permit, business license or registration certificate in accordance with law;Their legally-designated representative or principle responsible person, directly responsible managers and other directly responsible personnel are to be given warnings and fined between 500,000 and 5,000,000 RMB. where a crime is constituted, criminal responsibility is pursued in accordance with law.
For those who assist in illegal fundraising, the lead department for handling illegal fundraising shall give a warning and impose a fine of not less than 1 time but not more than 3 times the illegal gains;where a crime is constituted, criminal responsibility is pursued in accordance with law.
[Legal Index].Articles 3, 25, 30 and 31 of the Regulations on the Prevention and Handling of Illegal Fundraising.
What kind of offences may be constituted by illegal fundraising?
According to the provisions of China's current criminal law, illegal fundraising may constitute the crime of illegally absorbing public deposits and the crime of fundraising fraud.
The crime of illegally absorbing public deposits refers to the act of illegally absorbing public deposits or absorbing public deposits in disguised form in violation of national financial management laws and regulations, thereby disrupting the financial order.
The crime of fundraising fraud refers to the use of fraudulent methods to illegally raise funds for the purpose of illegal possession, in violation of the provisions of relevant financial laws and regulations, disrupting the normal financial order of the state, and infringing on the ownership of public and private property, and the amount is relatively large.
[Legal Index].Articles 176 and 192 of the Criminal Law of the People's Republic of China
How to define the "purpose of illegal possession" of the crime of fund-raising fraud?
In any of the following circumstances, it may be found to be "for the purpose of illegal possession":
1.After the fundraising, it is not used for production and business activities, or the use of production and business activities is obviously disproportionate to the scale of the funds raised, resulting in the inability to return the fund-raising funds;
2.Wantonly squandering the funds raised, so that the funds cannot be returned;
3.Fleeing with the funds raised;
4.Use of the funds raised for illegal and criminal activities;
5.Evasion, transfer of funds, concealment of assets, and evasion of the return of funds;
6.Concealing or destroying accounts, or engaging in fake bankruptcy or bankruptcy, to evade the return of funds;
7.Refusing to explain the whereabouts of the funds and evading the return of the funds;
8.Other circumstances where the purpose of illegal possession may be determined.
Where fraudulent methods are used to carry out the acts listed in [Question 5] for the purpose of illegal possession, it is to be convicted and punished as the crime of fundraising fraud.
[Legal Index].Article 7 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fundraising
Sentencing standards for the crimes of illegally absorbing public deposits and fund-raising fraud
Whoever commits the crime of illegally absorbing public deposits shall be sentenced to fixed-term imprisonment of not more than three years or short-term detention and/or a fine;where the amount is huge or there are other serious circumstances, a sentence of between 3 and 10 years imprisonment and a concurrent fine is to be given;where the amount is especially huge or there are other especially serious circumstances, a sentence of 10 or more years imprisonment and a concurrent fine is to be given.
where the crime of fundraising fraud is committed, and the amount is relatively large, the sentence is to be between three and seven years imprisonment and a concurrent fine;where the amount is huge or there are other serious circumstances, a sentence of 7 or more years imprisonment or indefinite imprisonment is to be given, and a concurrent fine or confiscation of property.
[Legal Index].Articles 176 and 192 of the Criminal Law of the People's Republic of China
What are the main manifestations of illegal fundraising activities?
In judicial practice, illegal fundraising activities take various forms, which are summarized as follows:
1.Establish Internet enterprises, investment and investment consulting enterprises, various trading venues or platforms, professional farmer cooperatives, mutual fund organizations and other organizations to absorb funds;
2.Issuing or transferring equity and creditor's rights, raising funds, selling insurance products, or engaging in various types of asset management, virtual currency, financial leasing business, etc
3.In commercial activities such as the sale of goods, the provision of services, and investment projects, funds are absorbed in the form of promises to pay returns such as money, equity, and in-kind;
4.Violating laws, administrative regulations, or relevant state provisions, publicly disseminating information on the absorption of funds through mass media, instant messaging tools, or other means;
5.Other suspected illegal fundraising.
[Legal Index].Article 19 of the Regulations on the Prevention and Handling of Illegal Fundraising
What are the specific behaviors of illegally absorbing deposits from the public?
Those who carry out any of the following acts and meet the requirements of the "four sexes" characteristics of illegal fundraising shall be punished as the crime of illegally absorbing public deposits:
1.Illegally absorbing funds by means of return sales, after-sales chartering, agreed repurchase, sales of real estate shares, etc., without the true content of real estate sales or without the main purpose of real estate sales;
2.Illegally absorbing funds by transferring forest rights and managing them on behalf of others;
3.Illegally absorbing funds by means of substitution planting (breeding), renting planting (breeding), joint planting (breeding), etc.;
4.Illegally absorbing funds by means such as commodity repurchase or consignment sales without the true content of selling goods or providing services, or not with the main purpose of selling goods or providing services;
5.does not have the true content of the issuance of ** or bonds, and illegally absorbs funds by means of false transfer of equity, sale of fictitious bonds, etc.;
6.does not have the true content of raising **, and illegally absorbs funds by pretending to be overseas**, selling fictitious **, etc.;
7.Illegally absorbing funds by impersonating insurance companies, forging insurance documents, etc., without the true content of selling insurance;
8.Illegally absorbing funds through online lending, investment in shares, virtual currency transactions, etc.;
9.Illegally absorbing funds by means of entrusted wealth management, financial leasing, etc.;
10.Illegally absorbing funds by providing 'pension services', investing in 'pension projects', selling 'products for the elderly', etc.;
11.Using non-governmental organizations such as "associations" and "societies" to illegally absorb funds;
12.Other acts of illegally absorbing funds.
[Legal Index].Article 2 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fundraising
The specific modus operandi of illegal fund-raising activities
One is the promise of high returns. Illegal fundraisers promise high returns, creating the myth of "getting rich overnight". In order to deceive more people to participate in fundraising, criminals often fulfill the promised principal and interest on time and in full in the early stage of fundraising, and after the fundraising reaches a certain scale, they may break the capital chain or abscond with the money due to poor management, and investors will suffer economic losses.
The second is to fabricate false projects. Most of the illegal fundraisers indeceive the public by registering legitimate companies or enterprises, in the name of responding to national policies, innovation and entrepreneurship, etc., with so-called new financial management methods such as private placement, crowdfunding, and factoring.
The third is false propaganda and momentum. Illegal fundraisers are good at publicizing and building momentum, holding various product promotion meetings, annual meetings, etc., hiring celebrities to stand on platforms, publishing advertisements on radio and television and Internet platforms, publishing exclusive interview articles in newspapers and periodicals, organizing the distribution of leaflets, and making social donations.
Fourth, the use of family affection to deceive. In order to increase their performance and seek illegal benefits, some illegal fundraisers will adopt methods similar to pyramid schemes, and do not hesitate to take advantage of family and geographical ties to fabricate lies that they have obtained high returns, and attract relatives, friends, classmates or neighbors to join, so that the number of participants will spread rapidly and the scale of fundraising will continue to expand.
The basic steps of illegal fund-raising activities
Step 1: Draw the pie. Illegal fundraisers will concoct projects that are as "high" as possible in order to absorb the funds. It is common to use new technologies, new revolutions, new policies, blockchain, virtual currencies, etc. as a guise to depict a blueprint for expected rewards, giving potential investors the illusion that the opportunity cannot be missed. Even if there is an illegal absorption of public deposits in real business, it often exaggerates the profitability and repayment ability of the project, and conceals it knowing that there is a huge financial risk.
Step 2: Build momentum. Illegal fundraisers are often adept at using resources to make a big splash. Common such as holding product promotion meetings, observation meetings, experience day activities, knowledge lectures, etc., organizing tours, inspections, etc., giving away daily necessities, souvenirs, phone bills, etc.;Display a variety of real or fake award certificates, ** approvals, "technical certifications", etc.;Announced the inspection of film and television materials by leaders, and the company's leaders took photos with celebritiesThe event was held in the conference center and auditorium, which was a big scene and a high-standard campaign.
Step 3: Absorb gold. The ultimate goal of illegal fundraisers is to extract the public's investment money. In the early stage, illegal fundraisers pay the proceeds to the fundraising participants on time through rebates and dividends, inducing the fundraising participants to believe that the funds are safe and the expected returns can be realized, and then invest more money, and even mobilize relatives and friends to join, so that the amount of funds raised is getting bigger and bigger.
Step 4: Run. Illegal fundraisers often run away after a period of "gold absorption", or the capital chain is broken due to poor management, or because the original "Ponzi **" people go to the empty building, and the overall project "thunders", at this time, the principal and expected income of the fundraising participants are difficult to pay. Most of the fundraising participants will suffer heavy economic losses, or even lose all their money, causing serious social harm.
Advice to potential investors and investors
For the majority of investors, it is necessary to enhance their awareness of the rule of law and risk, and they must know that investment is risky and financial management needs to be cautious. Specifically:
1.We should strengthen the learning Xi of relevant financial knowledge such as ** and trading, build our own trading system and financial management ideas, and be cautious about all kinds of investment publicity.
2.In addition to basic financial knowledge, students should also learn Xi relevant legal knowledge to improve their ability to identify and prevent illegal fundraising activities.
3.Investors who have investment consulting needs should look for formal investment consulting institutions, consult investment consultants with complete qualifications, and strengthen the specific investigation of the proposed investment projects, so as to do enough "due diligence" homework on investment.
4.Except as otherwise provided by laws, administrative regulations and the state, the names and business scope of enterprises and individual industrial and commercial households shall not contain words or content such as "finance", "exchange", "trading center", "wealth management", "wealth management", "equity crowdfunding", etc. Pay attention to the identification of market entities with the above characteristics.
5.For illegal fundraising and other illegal and criminal activities, report to the relevant departments in a timely manner to safeguard their legitimate rights and interests and help purify the market environment.
6.If an investment has already been made and the project "explodes", attention should be paid to collecting all investment evidence, detailing the specific investment process, making a detailed written report material, and submitting all the evidence to the case-handling organ, and cooperating with the case-handling organ's investigation. It should be believed that the judicial authorities and relevant departments will do their best to recover the stolen goods and recover the losses, make every effort to protect the rights and interests of the public, and handle the case fairly and impartially. **Jinan Intermediate Court.