Dacheng Attorneys Defend Client’s Innocence and Resolve Listing-related Disputes

Recently, an entrepreneur surnamed Li who had been charged with contract fraud and embezzlement received a ruling from an intermediary people’s court in which the court approved the public prosecutor’s withdrawal of prosecution. By now, a criminal case that had lasted 33 months was put to an end. Mr. Li was advised by Dacheng’s Beijing-based senior partner Qian Hongji, attorney Wang Xingbo, Zhengzhou-based senior partner and office head Li Xuyan and attorneys Zhang Xiang and Zhang Xiaoyu. Qian Hongji and Li Xuyan acted as Li’s defense attorneys.
 
The sixty-something Mr. Li has 26 years of experience in the manufacturing of express railway equipment and special cargo transportation facilities as well as road and bridge construction. His enterprise has contracted projects of the “863 Program” and has provided or is providing professional service for nearly 200 key national and local projects, including Beijing-Guangzhou Railway, Qinshen Passenger Railway and Beijing-Shanghai Express Railway. In 2008, private equity funds were introduced to his business. And in the first half of 2009, upon the suggestion of the PE partner, Mr. Li sought a back-door listing for his business in Hong Kong. Being too busy with the daily management of his business and totally unknowledgeable of the mechanism of capital operation, he entrusted the PE partner to take care of the listing. The partner in turn asked a middleman familiar with capital operation in Hong Kong for help. After subjecting his enterprise to a pre-IPO restructuring designed jointly by the partner, the middleman and the intermediary agency, Mr. Li found that he was losing control of his own business and thus asked for a discontinuation of the listing. The discontinuation, which would affect the prospective benefits of the middleman and some speculators, led them to file criminal charges against Mr.Li on account of contract fraud that would involve RMB37.81mln. Mr. Li was mistakenly detained for 27 months, during which time his business almost came to the brink of collapse. However, if he were proven guilty of all the charges, he would likely face life imprisonment.
 
Dacheng attorneys were entrusted with the difficult task of defending for Mr. Li at this critical moment given the complexity of the background and the fact that the investigative agency and public prosecutor had intervened long before. The attorneys, having analyzed details of the case, obtained every possible piece of evidence and met frequently with the defendant, finally decided to embark on a defense of innocence. As the case involved huge amount of specialized knowledge, the attorneys used diagrams to illustrate the complex process of restructuring and listing in front of the collegiate panel, so that the judges would fully understand the defense attorney’s arguments. During the two court sessions, the attorneys argued forcibly against all charges from the public prosecutor and presented a great deal of evidence to prove Li’s innocence. After that, the intermediary people’s court organized its judicial committee to review the case and asked for instructions from the Supreme People’s Court by way of its superior the high court. The court system eventually confirmed Li’s innocence and the public prosecutor consequently withdrew its charges against him.
 
Dacheng attorneys, by bringing into full play its capacity of providing comprehensive legal service and its global legal service network, not only conducted criminal defense for Mr. Li, but also assisted him in coping with the crisis facing his business. They settled a civil dispute between Li and the PE partner, represented Li in a central enterprise’s acquisition of one of Li’s established businesses and advised him on purchasing equity funds. All these efforts helped Li weather the crisis. In the course of service, Dacheng attorneys instructed Li’s family members and employees to voice their complaints in a cool-headed way in order to avoid social unrest. The case was a useful exploration into areas that called for urgent legal counsel in a business entity whose founder had been trapped in a crisis. It also broadened Dacheng attorneys’ scope of service.
 
In the two-and-a-half years, Dacheng attorneys upheld the professional ethics of being responsible and diligent, unyielding to power and striving for the best and showcased extraordinary legal service capability, thus winning recognition from Li and his family and employees. The case was also a successful instance of collaboration between Dacheng’s headquarters and its local office.