Author |Wang.
Editor丨Li Bo.
Source丨Visual China.
Recently, the Supreme People's Procuratorate and the Supreme People's Court jointly released typical cases of strictly cracking down on private placement crimes in accordance with the law.
In recent years, there have been illegal and criminal acts such as illegal fund-raising in the name of "private placement" in China, which seriously infringes on the legitimate interests of investors. Two such cases are in this batch of typical cases.
According to the nature of the crimes, the two cases were charged with the crime of illegally absorbing deposits from the public and the crime of fund-raising fraud.
According to reports, since 2021, procuratorial organs across the country have prosecuted a total of 2,085 people for private placement crimes. From 2021 to October 31, 2023, courts across the country sentenced a total of 1,888 people for private placements.
In the next step, the "two supremes" will continue to increase the punishment of crimes in the field of private placement, adhere to the idea of penetrating review and identification, accurately identify "pseudo private placement", and investigate criminal responsibility in accordance with the law for those who commit illegal fundraising crimes in the name of private placement, and cannot let criminals wear the disguise of "private placement" and evade legal sanctions.
Illegal fundraising for real estate projects
Su Mouming is the actual controller of Shenzhen Hong Wealth Management *** hereinafter referred to as "Hong Wealth Company") and Shenzhen Hong ** Management *** hereinafter referred to as "Hong ** Company"), and the above two companies are registered as private equity and venture capital ** managers in China **Investment Industry Association.
From July 2016 to July 2018, Su Mouming used two companies as private equity managers, successively established several limited partnerships, took a number of real estate development projects as investment targets, and issued 5 private equity ** products (4 of which were filed with the ** Industry Association).
However, in fact, Su Mouming concealed the fact that the investment projects were developed by companies under his actual control or developed in cooperation with others.
Su Mouming instructed others to organize the sales team to spread the word of mouth, hold a product promotion meeting, and publicize private equity products to the public through other financial institutions, private equity companies, and practitioners in the same industry to help promote private products, and allow unqualified investors to break through the restrictions on the number and amount of private equity investors through "spelling" and "holding", and the affiliated companies actually controlled by Su Mouming signed a repurchase agreement with investors, and Su Mouming personally provided unlimited joint and several liability guarantees, with an agreed annual interest rate of 10% to 14A return of 5% is a disguised promise to guarantee the payment of principal and interest.
Su Mouming and others illegally raised a total of RMB 5 through the above methods99.9 billion yuan.
After the above-mentioned funds entered the fundraising account of the partnership, they were transferred to several accounts controlled by Su Mouming, and the funds of each private placement ** product were mixed and used by Su Mouming in a unified manner.
Among them, the principal and interest will be paid in the form of raising new and repaying the old 1More than 500 million yuan, used for private equity ** agreed investment project 1More than 300 million yuan for other real estate projects developed by Su Mouming1More than 200 million yuan for the purchase of building materials1More than 100 million yuan, which is used to pay employee salary commissions, the company's operating costs and repay the company's debtsMore than 900 million yuan.
Due to the rupture of the capital chain, Su Mouming was unable to pay the principal and interest on time. As of the time of the case, the investor's principal had lost 4More than 4.1 billion yuan.
In May 2021, the Shenzhen Futian District People's Court made a first-instance judgment, finding Su Mouming guilty of illegally absorbing public deposits, and sentenced Su Mouming to five years in prison and a fine of RMB 300,000. None of the defendants in this case appealed.
Filing is not the same as legal permission
The typical significance of Su Mouming's case lies in the fact that the registration of the private placement manager and the filing or partial filing of the private placement do not affect the determination of the "illegality" of the illegal fundraising.
According to reports, there is no administrative examination and approval for private placement, and the private placement manager shall apply for registration with the ** industry association, and handle the ** filing after the completion of the fundraising.
Private placement** has two basic attributes: "non-public" and "offering to specific accredited investors". There are various means of illegal fund-raising in the name of private placement, which are essentially to break through the "private" nature of private placement and the bottom line of investment risk, and illegally raise funds in an open, social and luring manner.
According to reports, the commonly used means are: through **, WeChat, lectures, promotion meetings, analysis meetings, net-type consignment recommendations and other ways to unspecified objects of publicity, with openness;By organizing unqualified investors to privately agree to hold ** shares, allowing "single listing" to split and transfer private ** shares or income rights, and setting up multiple private placements for the same financing project, etc., the standards for qualified investors are lowered, and the restrictions on the number of investors are circumvented, which is socialIn addition to the private placement ** subscription contract, it is attractive to promise to repay principal and interest or pay returns by signing a supplementary agreement or verbally promising to repurchase, guarantee, annualized rate of return, etc., with expected profits as an inducement.
If the act of issuing and selling private placements has the above-mentioned "four characteristics" characteristics, it is illegal fundraising or disguised illegal fundraising, and criminal responsibility shall be pursued in accordance with law.
Illegally raised more than 7.8 billion yuan
In May 2015, Meng registered and established Zhongji **Chain Group, hereinafter referred to as "Zhongji Group"), and served as the legal representative and chairman.
From November 2015 to June 2020, a Zhongji Group and its directly responsible supervisor Meng, general manager Cen and deputy general manager Zhuang adopted a self-financing and self-use business model through a number of companies and cooperative companies under the actual control of Zhongji Group, and engaged in the design, issuance, sales, investment and financing activities of private equity products around Zhongji Group.
They instructed the controlled company to use falsified financial data and private placement products with false contract design content to split a single financing project into several ** products in the name of investing in the equity of a number of shell companies actually controlled by a Zhongji Group, and successively issued 39 private equity ** products with the three companies under their control as private equity managers.
These three companies are registered as private equity and venture capital managers in the ** industry association, and 39 products are registered in the ** industry association.
The relevant ** products are sold by companies that do not have the qualifications for private sale**. They instructed the sales company to hold publicity meetings, hold financial forums, summit cocktail parties, make random calls, and place promotional materials in the public area of the hotel to publicize private placement products, falsely claiming that a letter of guarantee was issued by a certain Zhongji Holding Group with a state-owned background, pledged with fictitious accounts receivable, and promised to guarantee principal and interest in disguise, exceeding the amount and time of filing, rolling sales of private placement products, and illegally raising funds of RMB 78More than 8.1 billion yuan.
After the raised funds were transferred to the shell target project company, they were illegally pooled from the custody account to the account of Zhongji Group to form a capital pool, which was arbitrarily used by Meng and Cen.
Among the above-mentioned fund-raising, 42More than 500 million yuan, pay sales commissions, employee salaries, and security deposits of 17More than 100 million yuan was transferred to the personal account controlled by Meng and Cen and personal squandering consumption3More than 900 million yuan, foreign investment of 17More than 500 million yuan.
The projects invested by a Zhongji Group are in a state of long-term loss, mainly relying on raising new funds to repay old ones to maintain operation. As of the time of the case, the investor's principal had lost 38More than 2.2 billion yuan.
On August 15, 2019, an investor reported to the Pudong Branch of the Shanghai Municipal Public Security Bureau that the private placement ** product he purchased could not be withdrawn when it expired. However, the Pudong Branch made a decision not to file the case on the grounds that the private placements involved in the case had been filed with the China Association of the First Industry and there were no criminal facts.
After receiving clues from the supervision of the case, the Shanghai Pudong New Area People's Procuratorate found that the case was an illegal fund-raising act in the form of private placement. On April 10, 2020, the Pudong New Area People's Procuratorate issued a Notice of Request for Explanation of the Reasons for Not Filing the Case to the Pudong Branch of the Shanghai Municipal Public Security Bureau. Subsequently, the Pudong Branch of the Shanghai Municipal Public Security Bureau filed and investigated the case.
During the handling of the case, the First Branch of the Shanghai Municipal People's Procuratorate respectively issued procuratorial suggestions to the Qingdao Supervision Bureau of the China Banking and Insurance Regulatory Commission and a Zhongji Holding Group, and made suggestions on the failure of the private equity custodian bank to perform its duties and responsibilities and the non-standard foreign cooperation of state-owned enterprises found in the case, and the two units actively implemented the rectification and replied to the procuratorate in a timely manner.
On November 30, 2022, the Shanghai No. 1 Intermediate People's Court made a first-instance judgment, sentencing Zhongji Group to a fine of RMB 100 million for fund-raising fraud, sentencing Meng and Cen to life imprisonment, deprivation of political rights for life, and confiscation of all personal property. Defendant Zhuang X died of illness during the course of the court trial, and the trial of him was terminated in accordance with law.
Meng and Cen appealed. On March 13, 2023, the Shanghai Higher People's Court issued a final ruling, rejecting the appeal and upholding the original judgment.
Illegal deposit or fundraising fraud?
It is also illegal fundraising in the name of private placement, why was the above-mentioned Su Mouming and others convicted of illegally absorbing public deposits, but in this case, Meng Mouming and others were convicted of fundraising fraud?
According to reports, whether or not there is an illegal possession purpose is the key to distinguishing the crime of illegally absorbing public deposits from the crime of fund-raising fraud.
For the issuance of private equity products that meet the characteristics of the "four natures" of the crime of illegal fundraising, but most of the funds are used for real project investment, and there are no circumstances such as evasion, transfer, concealment, or squandering, it may not be found to have the "purpose of illegal possession".
In the Su Mouming case, Su Mouming and others carried out illegal fundraising activities in the name of private placement, and in addition to returning principal and interest and maintaining operations, the raised funds were mainly used for the purchase of agreed real estate projects, other real estate projects and building materials related to the project, and the project was genuine, and it was determined that it did not have the purpose of illegal possession in accordance with the law, and was investigated for criminal responsibility for the crime of illegally absorbing public deposits.
However, in the name of issuance, sale, and private placement, the use of fraudulent methods to illegally raise funds, and the purpose of illegal possession of the raised funds, constitutes the crime of fundraising fraud.
In the case of Zhongji Group, Meng et al. fabricated external ** projects, falsified financial information and issued private placements with false content, and used false guarantees to induce investors to invest, which is a typical use of fraudulent methods to raise fundsAlthough more than 1.7 billion yuan is used for investment, it is obviously disproportionate to the scale of the raised funds, and the investment project has not undergone sufficient due diligence in the early stage, and there is no effective management of the use of funds after the investment is made, and the decision on the use of funds is extremely irresponsible, and it should be determined that it has the purpose of illegal possession in accordance with the law.
sfc
Editor: Zhong Hailing, intern: Xiao Nan.
21 Jun recommended reading
21st Century Business Herald Special Issue丨Guangdong High Quality: New Direction, New Momentum, New Breakthrough.
Launched overnight!The redemption plan was announced.
Eighty percent of private placements are optimistic about A-shares in 2024.