SPP ups supervision of new financial crimes

The supervision and investigation of newly emerging types of financial crimes will be intensified to prevent and defuse risks, the Supreme People's Procuratorate said recently.

Since 2018, about 180,000 people have been prosecuted for obstructing financial management orders and financial fraud, according to the SPP.

Procuratorates have also strictly punished new types of illegal fundraising in fields such as online lending, private funds, elderly care and blockchain, and prosecuted 110,000 people for illegal fundraising over the same period, said Zhang Xiaojin, head of the SPP's fourth procuratorial office.

In view of the major risks of long-term illegal operations of individual financial institutions in credit activities, the SPP has worked with other departments to properly handle and resolve the risks, he said.

"We also intensified the supervision of case filing and gathering evidence based on the trend that traditional financial crimes such as illegal fundraising, counterfeiting currency and credit card cashing being transferred to internet channels," he said.

The division of labor of financial crimes, especially online financial crimes, has become increasingly detailed, giving rise to a huge illegal network, Zhang said, adding that the means for committing online financial crimes are often well concealed and difficult to investigate, which pose major hidden threats for financial security.

Financial crimes often involve professional matters, and investigators need to overcome the difficulties in evidence collection and review, he said.

In one published case, from July 2012 to 2018, Zhang Yeqiang and Bai Zhongjie registered a number of companies and obtained the qualifications for private equity transactions, venture capital fund manager and private securities investment fund manager.

From October 2014 to August 2018, Zhang and Bai controlled projects as investment targets for the issuance of private equity funds, set up branches in other cities and created false advertisements to defraud investors' trust.

They allowed unqualified investors to purchase private funds and entered into private fund share repurchase contracts with investors, promising them high annualized returns.

Through the above methods, they issued and sold 133 private funds, illegally raising about 7.68 billion yuan ($1.07 billion) in public funds. When the case was investigated, the principal loss totaled about 2.85 billion yuan.

The Nanjing People's Procuratorate charged them with the crime of fundraising fraud in June 2019.

In August 2021, the Nanjing Intermediate People's Court sentenced Zhang to life imprisonment, deprived him of political rights for life and confiscated all his personal property for the crime of fundraising fraud. Bai was sentenced to 15 years in prison, and his property was also confiscated.

Zhang Xiaojin said that the issuance and sale of private funds must be carried out in strict accordance with the law. In handling such cases, prosecutors need to penetrate the disguise of the private funds involved to understand the actual process of raising funds and gauge whether the private funds have legal problems.

Investors should pay great attention to legal risks in the field of private funds and improve their ability to identify and prevent them. Meanwhile, the practitioners should abide by the law and operate in good faith, so as to jointly maintain the healthy development of the capital market, he said.