Dacheng Attorneys Represent Clients in Typical Economic Crime Case

In February 2012, the No. 2 Branch of the People’s Procuratorate of Beijing accused two people (surnamed Weng and Fang respectively) of illegally putting up a shopping plaza in Tongzhou District and cheating over 350 tenants into signing lease contracts without a license for operating the plaza. The prosecutor claimed the two had swindled RMB13mln out of the tenants and suggested imprisonment of more than ten years or life imprisonment on charges of contract fraud.
 
Dacheng senior partners Zhao Yunheng and Xu Xilong, acting as Weng and Fang’s defense lawyers respectively, examined facts of the case and convened experts in further discussions before coming to three arguments disproving the accused fraud: first, the defendants did not hide the fact from the tenants that the shopping plaza lacked approval from relevant authorities and thus may involve risks; second, although the defendants had twice solicited tenants, they had not the intention of appropriating the tenants’ money, given that they gave back all the money collected from the tenants for the first time due to a failure to get all necessary licenses and returned most of the money the second time. Both of the instances happened before the public security agency intervened; third, the unreturned money was utilized by the two for decorating the plaza and recruiting management staff, not for their own good. Harboring no fraudulent intentions, the two people actually had envisaged long-term operation of the plaza. In the court trial, the attorneys pointed out that the phenomenon where business premises fail to get all required licenses in advance of operation is not uncommon in China. If the current case is convicted of contract fraud, it would represent a precedent that may impact negatively on similar cases.
 
As a result of the two sides’ huge difference regarding the interpretation of the offence, coupled with strong arguments from the defense side, Beijing Second Intermediate People’s Court found it difficult to reach a fair judgment and resorted to Beijing Higher People’s Court and the Supreme People’s Court. The twists and turns took a year and a half before the Supreme Court confirmed that the case did not constitute contract fraud. Recently, Beijing Second Intermediate People’s Court ruled in favor of the defense attorneys and sentenced the defendants to three years in prison on account of illegal business operation. Since the two had been detained for three years already, they would be released in a few days following the ruling.
 
The current case may shed light on whether the judiciary should attend to cases where business premises in operation lack sufficient licenses. Judging from the Supreme Court’s feedback and the ruling from the trial court, such phenomenon should not be counted as criminal offence.