[Authors Note]
The fundamental distinction between fraud and civil fraudulent acts lies in the presence or absence of an "intent to unlawfully possess" —the act of excluding the rights holders legitimate interests, appropriating others property as ones own, and intending to utilize it for purposes beyond its original economic value. However, since intent to unlawfully possess is inherently subjective, accurately identifying this abstract mental state cannot be achieved through mere "vague" confessions. A comprehensive assessment must be based on objective evidence and criminal presumptions. Therefore, the criminal presumption method plays a crucial role in resolving evidentiary challenges in judicial practice.
I. CASE STUDIES
Party A established C Technology Company in City B, which operated without actual business activities. During its operation, the company recruited employees and trained them to sell products from State-Owned Enterprise D (D SOE) to consumers under the guise of SOE staff. However, neither D SOE had launched the new product, nor had C Company obtained any authorization from D SOE. The sales team falsely claimed that installing the product required only a 3,000 yuan deposit, which would be fully refunded to customers accounts within four years through monthly rebates. They also promised users a free 1,000 yuan mobile phone when handling business with D SOE. In reality, the rebates received by users after installation fell short of the agreed standards or were completely non-existent. After negotiations, C Company offered to make up for the shortfall or process refunds with a 20% penalty fee. When users discovered the scam and contacted D SOEs customer service, they found that the product never existed and the deposit had been transferred to C Companys account. Consequently, they filed a police report.
In the above cases, it is self-evident that Company C used the method of fabricating facts and concealing the truth to make users fall a wrong understanding. However, whether it has the purpose of illegal possession is still worth discussing. The focus of the dispute lies in:
1. Does the above act constitute criminal fraud or civil fraud? What is the essential difference between them?
2. In the criminal form of fraud, the purpose of illegal possession often occurs before or at the same time as the deceptive act. If it occurs after the deceptive act, does it still meet the subjective constitutive requirements of fraud?
3. In judicial practice, when determining the purpose of illegal possession, the subjective purpose of the actor needs to be presumed by means of objective behavior. Whether there is a unified principle for such presumption? Which key factual factors should be ed? What kind of presumption method should be used? In order to accurately judge the subjective purpose of the actor.
The watershed between criminal fraud and civil fraud: the purpose of illegal possession
The distinction between criminal fraud and civil fraud hinges on whether the perpetrator harbors an intent to unlawfully possess property. Professor Zhao Bingzhi clarifies: "Civil fraud inherently encompasses fraudulent acts, forming a hierarchical relationship fraud is defined as criminal deception combined with unlawful possession." In civil fraud, the subjective intent need not be assessed for actual loss or gain derived from fraudulent conduct. Conversely, criminal fraud requires the perpetrator to demonstrate an intent to unlawfully possess property, with the amount involved and resulting financial losses serving as key factors for establishing this intent through legal presumption.
In the aforementioned case, does this act constitute criminal fraud or civil fraud? Or more specifically, does it demonstrate intent to unlawfully possess? The assessment should be based on three objective factors: the purpose of fund usage, the perpetrators financial status, and subsequent fulfillment of obligations. The fund usage directly reflects the perpetrators intention to dispose of assets. The perpetrators financial status indicates whether the counterparty has accessible legal remedies or can recover losses through civil litigation. The perpetrators subsequent fulfillment of obligations reveals whether they intended to facilitate, tolerate, or resist the counterpartys legal actions.
Specifically, when a fraudulent act is discovered, the counterparty will attempt to use legal means to protect their rights and recover losses. If the perpetrator intends to recover these losses, it should not be deemed as having an illegal possession intent. However, if the perpetrator adopts an indifferent or resistant attitude, or even sets up multiple obstacles, it should be recognized as having an illegal possession intent. Therefore, the author argues that in this case, the perpetrator demonstrated proactive performance of contractual obligations and should not be deemed to have an illegal possession intent, thus failing to constitute fraud.
How to determine the purpose of illegal possession after the act of deception
In the typical steps of fraud, the perpetrator has the purpose of illegal possession-for this, he plans and creates conditions-implements the act-damages are produced. When the intention of illegal possession is generated after the completion of the deception and the voluntary delivery of property by the other party, does it affect the establishment of fraud?
The author argues that Article 266 of the Criminal Law stipulates: "The crime of fraud is committed with the intent of unlawful possession, using fabricated facts or concealment of truth..." From the perspective of legal hermeneutics, the expression of the intent to unlawfully possess is clearly placed before the description of objective conduct. There should be a "prior" or "concurrent" relationship between the two. The perpetrators subjective criminal intent must be pre-existing, meaning subsequent criminal acts should be carried out under their subjective will, rather than being inferred from later criminal intentions or deceptive actions as evidence of inherent unlawful possession intent from the outset. Therefore, recognizing the intent to unlawfully possess that arises after fraudulent acts as an embezzlement-type property crime is more reasonable.
IV. Principles and steps of criminal presumption of illegal possession
In determining the intent of unlawful possession, we must adhere to the principle of consistency between subjective intent and objective conduct. When evaluating an individuals subjective malice and fraudulent acts, we should adopt a holistic perspective rather than relying solely on damage outcomes for reverse inference that leads to objective imputation. Conversely, excessive emphasis on confessions should be avoided. It is essential to establish clear objective facts and then apply rigorous legal logic to deduce the perpetrators subjective intent.
In the aforementioned case, the disposition of the deposit by the party is crucial for determining whether they had the intent of illegal possession. If the party has already engaged in "profit-sharing" or similar actions with the deposit, it goes without saying that their subjective intent should be presumed. However, if the party has established proper after-sales channels but has not disposed of the deposit, the determination of their intent to illegally possess must follow the presumption principle and undergo a comprehensive evaluation through the established procedures.
What then are the steps in criminal presumption? First, the evidence in the case should be systematically organized to establish a complete chain of evidence, thereby determining the factual basis required for presumption. Second, particular attention should be paid to whether the perpetrator made false promises beforehand, the deceptive methods and means employed during the act, as well as their post-facto disposition of assets. Finally, the perpetrator should be allowed to overturn presumed facts, ensuring their right to defend themselves and present evidence.
In conclusion, accurately determining whether there was an intent of unlawful possession and the timing of its formation is crucial for distinguishing between criminal acts and non-criminal acts, as well as different offenses. This requires adhering to the principle of objective-subjective consistency in criminal presumption, conducting comprehensive analysis through rigorous evidentiary procedures. Furthermore, it is essential to fully safeguard the rights of individuals involved to prevent inconsistent sentencing outcomes in similar cases.
