Punish illegal fundraising crimes in accordance with the law

Maintain national financial security and stability

——Relevant Head of the Third Criminal Division of the Supreme People's Court

Answering reporters' questions on the judicial interpretation of criminal cases of illegal fundraising

1. Please introduce the background and process of formulating the 《Amendment Decision》.

Answer: In order to punish illegal fundraising crimes such as illegally absorbing public deposits and fundraising fraud in accordance with the law, the Supreme People's Court formulated the 《Interpretation on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fundraising》 in 2010, and the "Two Highs and One Department" issued the 《Opinions on Several Issues Concerning the Application of Law in the Handling of Criminal Cases of Illegal Fundraising》 in 2014, and the 《Opinions on Several Issues Concerning the Handling of Criminal Cases of Illegal Fundraising》 in 2019, which clarified the sentencing standards and related legal application issues for illegal fundraising crimes such as illegally absorbing public deposits and fundraising fraud. Since the implementation of the 《Interpretation》, the public security, procuratorial, and judicial organs have strictly followed the provisions of the Criminal Law and the 《Interpretation》 to punish illegal fundraising crimes in accordance with the law, effectively prevent and resolve major financial risks, and effectively maintain financial management order and national financial security, achieving remarkable results.

The 《Criminal Law Amendment (XI)》, which came into effect on March 1, 2021, made significant amendments to the criminal law provisions on the crime of illegally absorbing public deposits and the crime of fundraising fraud, adding the third level of statutory punishment for the crime of illegally absorbing public deposits, increasing the minimum statutory punishment for the crime of fundraising fraud, and stipulating active restitution and compensation as statutory circumstances for leniency or mitigation of punishment, which has a significant impact on the conviction and sentencing of the crime of illegally absorbing public deposits and the crime of fundraising fraud, and it is urgent to amend and improve the 《Interpretation》. At the same time, in combination with the economic and social development situation and judicial practice, it is necessary to appropriately adjust the relevant conviction and sentencing standards, and further clarify the relevant legal application disputes through judicial interpretation.

It has taken a full year from the start of the revision of the 《Interpretation》 at the beginning of last year to the present. Our court drafted the 《Amendment Decision》 on the basis of in-depth research and summary. During this period, we successively solicited opinions from the Supreme People's Procuratorate, the Ministry of Public Security, and other relevant departments such as the Inter-Ministerial Joint Conference on the Prevention and Disposal of Illegal Fundraising under the State Council, the Higher People's Courts across the country, and the criminal divisions and research offices of our court, and held expert seminars to listen to opinions and suggestions. At the same time, we solicited opinions from the Legislative Affairs Commission of the National People's Congress Standing Committee, and after repeated research and argumentation, we continued to revise and improve it. After the deliberation and approval of our court's adjudication committee, we once again solicited written opinions from the Legislative Affairs Commission of the National People's Congress Standing Committee, the Supreme People's Procuratorate, and the Ministry of Public Security, and made further revisions and improvements based on relevant opinions and suggestions, and finally issued the 《Amendment Decision》.

2. Please introduce the main contents of the revision of the 《Interpretation》.

Answer: The original 《Interpretation》 had nine articles, and the revised 《Interpretation》 has fifteen articles. Five of the articles have been revised, and six articles have been added. The focus is on revising and improving the conviction and sentencing standards for the crime of illegally absorbing public deposits and the crime of fundraising fraud. At the same time, the characteristics and essential elements for determining the crime of illegally absorbing public deposits and the ways of illegally absorbing funds have been further revised and improved, the standards for the amount of fines for the crime of illegally absorbing public deposits and the crime of fundraising fraud have been clarified, the principles for concurrent punishment for the crime of illegally absorbing public deposits, the crime of fundraising fraud, and the crime of organizing and leading pyramid schemes have been clarified, the conviction and sentencing standards for units committing the crime of illegally absorbing public deposits and the crime of fundraising fraud have been clarified, and some textual revisions have been made to individual articles.

3. What revisions has the 《Amendment Decision》 made to the characteristics and essential elements of the crime of illegally absorbing public deposits, and what new ways of illegally absorbing funds have been added?

Answer: Article 1 of the original "Interpretation" stipulated the characteristic elements for identifying the crime of illegally absorbing public deposits, namely illegality, publicity, inducement, and sociality. This is one of the core provisions of the "Interpretation." Practice has proven that the four characteristic elements for identifying the crime of illegally absorbing public deposits are in line with judicial practice and are indispensable. The revised "Interpretation" maintains the four identification elements unchanged and makes appropriate modifications to the expressions in Items 1 and 2 of the first paragraph of the article based on relevant laws and judicial practice. Among them, "approved according to law" in Item 1 is revised to "permitted according to law," which better highlights the rule of law thinking and is more accurate in expression; "mobile phone text message" in Item 2 is revised to "mobile phone information," and the method of publicity through the "Internet" is added to further improve the methods and channels for publicizing to the public.

Article 2 of the original "Interpretation" stipulated ten types of behaviors for illegally absorbing funds and included a catch-all clause. The revised "Interpretation" expands upon the original provisions by incorporating new judicial practices and emerging forms of crime, adding new types of illegal fund-raising behaviors such as online lending, virtual currency transactions, and financial leasing to Items 8 and 9. Additionally, it adds Item 10, which addresses "illegally absorbing funds by providing 'elderly care services,' investing in 'elderly care projects,' and selling 'elderly products,' etc.," thus providing a basis for依法惩治illegal fund-raising crimes in areas such as P2P lending, virtual currency, and elderly care. It should be noted that in recent years, illegal fund-raising crimes targeting the elderly have become increasingly frequent. Criminals are conducting illegal fund-raising activities under the guise of "elderly care services," "elderly care projects," "elderly products," and schemes like "housing for the elderly," which severely harm the legitimate rights and interests of the elderly, seriously disrupt the order of financial management, and endanger national financial security and social stability, and should be severely punished according to the law.

4. What adjustments and modifications have been made to the standards for conviction and sentencing for the crime of illegally absorbing public deposits in the "Amendment Decision"?

Answer: The "Criminal Law Amendment (XI)" added the third level of statutory penalty for the crime of illegally absorbing public deposits and increased the statutory maximum penalty, that is: if the amount is particularly huge or there are other particularly serious circumstances, a fixed-term imprisonment of not less than ten years shall be imposed, and a fine shall also be imposed. Article 3, Paragraph 1 of the original "Interpretation" stipulated the first level of criteria for conviction of the crime of illegally absorbing public deposits, and Paragraph 2 stipulated the criteria for the second level of "huge amount or other serious circumstances." The "Amendment Decision" made major revisions to the original Article 3 of the "Interpretation." After the revision, Articles 3, 4, and 5 of the "Interpretation" respectively stipulate the first level of criteria for conviction, the criteria for identifying the second level of "huge amount or other serious circumstances," and the criteria for identifying the third level of "particularly huge amount or other particularly serious circumstances." The main modifications are as follows:

First, the standards for punishing crimes committed by natural persons and crimes committed by entities are no longer distinguished. Paragraphs 1 and 2 of the original Article 3 of the "Interpretation" respectively stipulated the standards for conviction and punishment of crimes committed by natural persons and crimes committed by entities. The revised "Interpretation" no longer distinguishes between the standards for punishing crimes committed by natural persons and crimes committed by entities, reflecting the spirit of severely punishing crimes committed by entities.

Second, the first-level criteria for conviction are appropriately raised. Combining the economic and social development and judicial practice, the amount of illegally absorbed public deposits, the number of targets of illegally absorbed public deposits, and the amount of direct economic losses caused are appropriately increased to leave some space for administrative penalties. On this basis, the standard of "huge amount or other serious circumstances" is determined according to five times the amount (quantity) standard for conviction; the standard of "particularly huge amount or other particularly serious circumstances" is determined according to ten times the huge amount (quantity) standard. The reason why the standard of "particularly huge amount or other particularly serious circumstances" is determined according to ten times the standard is mainly to consider that the statutory penalty range of the second level is large (fixed-term imprisonment of three to ten years), and the distance between the second and third levels should be widened to avoid cases being concentrated in the third level of sentencing, which is conducive to the balanced handling of cases.

Third, the standard of "amount + circumstances" is added. While appropriately raising the criteria for conviction, in order to effectively punish such crimes and organically connect with the original criteria for conviction, Paragraph 2 of Article 3 of the revised "Interpretation" stipulates the standard of "amount + circumstances" and clarifies three types of "amount + circumstances" for conviction, namely: the amount of illegally absorbing or absorbing public deposits in disguised form is more than 500,000 yuan or the amount of direct economic losses caused to depositors is more than 250,000 yuan, and at the same time, they have been subject to criminal investigation for illegal fund-raising, have been subject to administrative penalties for illegal fund-raising within two years, or have caused adverse social impact or other serious consequences, they shall be investigated for criminal responsibility in accordance with the law. Correspondingly, Paragraph 2 of Articles 4 and 5 of the revised "Interpretation" also stipulates the identification standards of "amount + circumstances" for "other serious circumstances" and "other particularly serious circumstances" respectively. It should be noted that considering that the circumstances of "having been subject to criminal investigation for illegal fund-raising" and "having been subject to administrative penalties for illegal fund-raising within two years" are used as circumstances for determining "other serious circumstances" and "other particularly serious circumstances," there is a suspicion of repeated evaluation and aggravation of punishment for previous convictions and recidivists, so the determination of "other serious circumstances" and "other particularly serious circumstances" is limited to the circumstances of "causing adverse social impact or other serious consequences."

5. How does the revised "Interpretation" stipulate the circumstances of actively returning illicit gains (赃款 zāngkuǎn) and providing compensation (赔偿 péicháng) for the crime of illegally absorbing public deposits, and how does it reflect the spirit of leniency?

Answer: Paragraphs 3 and 4 of the original Article 3 of the "Interpretation" stipulated the identification standards for the amount of illegally absorbed public deposits, clearly stipulating that the amount returned before and after the case can be considered as a sentencing factor at the discretion of the court, and stipulating the circumstances in which criminal punishment can be exempted and the act not treated as a crime. The "Criminal Law Amendment (XI)" stipulates that actively returning illicit gains (赃款 zāngkuǎn) and providing compensation (赔偿 péicháng) for the crime of illegally absorbing public deposits are statutory sentencing factors. The revised "Interpretation" incorporates Paragraphs 3 and 4 of the original Article 3 as Paragraphs 1 and 2 of Article 6 and makes corresponding revisions, clearly stipulating that: (Paragraph 1) The amount of illegally absorbing or absorbing public deposits in disguised form shall be calculated based on the full amount of funds absorbed by the actor. Actively returning illicit gains (赃款 zāngkuǎn) and providing compensation (赔偿 péicháng) before the prosecution is filed to reduce the occurrence of damage may result in a lighter or mitigated punishment; returning illicit gains (赃款 zāngkuǎn) and providing compensation (赔偿 péicháng) after the prosecution is filed may be considered as a sentencing factor at the discretion of the court. (Paragraph 2) Illegally absorbing or absorbing public deposits in disguised form, mainly used for normal production and business activities, and being able to return (清退 qīngtuì) the absorbed funds before the prosecution is filed, may be exempted from criminal punishment; if the circumstances are obviously minor and the harm is not significant, it shall not be treated as a crime. It should be pointed out that the application of Paragraph 2 is not limited to the circumstances of conviction stipulated in Article 3 of the revised "Interpretation," but also applies to the circumstances stipulated in Articles 4 and 5. As long as the conditions for the application of Paragraph 2 are met, it can be applied. At the same time, combined with the actual work, in order to strengthen the connection between administrative penalties and criminal penalties, a paragraph is added as Paragraph 3 of this article, stipulating that if it is not necessary to pursue criminal responsibility or exempt from criminal punishment in accordance with the law, the case shall be transferred to the relevant administrative organs in accordance with the law.

6. What adjustments and modifications have been made to the standards for conviction and sentencing for the crime of fund-raising fraud in the "Amendment Decision"?

Answer: The "Criminal Law Amendment (XI)" has changed the statutory penalty for the crime of fundraising fraud from three levels to two levels, increased the statutory minimum penalty for the first level, and increased the statutory maximum penalty for the second level to life imprisonment. The "Amendment Decision" did not change the conditions for determining the crime of fundraising fraud. The revised "Interpretation" has made appropriate adjustments and modifications to the conviction standards for the crime of fundraising fraud. First, the penalty standards for natural person crimes and unit crimes are no longer distinguished. The original Articles 5, Paragraphs 1 and 2 of the "Interpretation" respectively stipulated the conviction and punishment standards for natural persons and unit crimes. The revised "Interpretation" no longer distinguishes between the punishment standards for natural person crimes and unit crimes, reflecting the spirit of severely punishing unit crimes. Second, the amount standard has been appropriately adjusted. In order to fully reflect the legislative spirit of severely punishing the crime of fundraising fraud, the revised "Interpretation" maintains the original amount standard for conviction, and at the same time uses the original third level of "particularly huge amount" (1 million yuan) as the standard for the revised second level of "huge amount" to maintain the relative stability of the case sentencing. Third, a "amount + circumstances" standard is added. Article 8, Paragraph 2 of the revised "Interpretation" stipulates the identification standard of "amount + circumstances" for "other serious circumstances", and limits the identification of "other serious circumstances" to the circumstances of Item 3 of Paragraph 2 of Article 3 "causing adverse social impact or other serious consequences".

7. How does the revised "Interpretation" stipulate the application of fines for the crime of illegally absorbing public deposits and the crime of fundraising fraud?

Answer: The original articles of the Criminal Law stipulated the amount of fines for the crime of illegally absorbing public deposits and the crime of fundraising fraud. The "Criminal Law Amendment (XI)" abolished the amount of fines. According to the spirit of legislative amendments and judicial practice, in order to increase the intensity of fines, the revised "Interpretation" clarifies the amount standards for the first and second levels of fines for the crime of illegally absorbing public deposits and the first level of fines for the crime of fundraising fraud, as well as the lower limit of fines for the third level of the crime of illegally absorbing public deposits and the second level of the crime of fundraising fraud. While increasing the amount of fines, the upper limit of fines for the third level of the crime of illegally absorbing public deposits and the second level of the crime of fundraising fraud is not limited to meet the needs of judicial practice. Whoever commits the crime of illegally absorbing public deposits shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be sentenced to a fine of not less than 50,000 yuan but not more than 1 million yuan, or shall be sentenced to a fine alone; if he is sentenced to fixed-term imprisonment of not less than three years but not more than ten years, he shall also be sentenced to a fine of not less than 100,000 yuan but not more than 5 million yuan; if he is sentenced to fixed-term imprisonment of not less than ten years, he shall also be sentenced to a fine of not less than 500,000 yuan. Whoever commits the crime of fundraising fraud and is sentenced to fixed-term imprisonment of not less than three years but not more than seven years shall also be sentenced to a fine of not less than 100,000 yuan but not more than 5 million yuan; if he is sentenced to fixed-term imprisonment of not less than seven years or life imprisonment, he shall also be sentenced to a fine of not less than 500,000 yuan or confiscation of property.

8. How does the revised "Interpretation" consider the principle of punishment for the concurrence of the crime of illegally absorbing public deposits, the crime of fundraising fraud, and the crime of organizing and leading pyramid schemes?

Answer: In judicial practice, some cases illegally absorb funds from the public through pyramid schemes. There are different views on the conviction and punishment of such cases. Some believe that multiple crimes should be punished concurrently; others believe that the heavier crime should be chosen for punishment. Article 6, Paragraph 1 of the "Opinions on Several Issues Concerning the Application of Law in Handling Criminal Cases of Organizing and Leading Pyramid Schemes" issued by the "Two Highs and One Department" in 2013 stipulates: "Whoever organizes or leads pyramid schemes for the purpose of illegal possession and constitutes the crime of organizing or leading pyramid schemes and the crime of fundraising fraud at the same time shall be convicted and punished in accordance with the provisions for the heavier punishment." In view of the existence of fraud-type pyramid schemes and business-type pyramid schemes in practice, illegally absorbing funds from the public through pyramid schemes may constitute the crime of illegally absorbing public deposits or the crime of fundraising fraud. Based on this, Article 13 of the revised "Interpretation" stipulates that whoever illegally absorbs funds from the public through pyramid schemes and constitutes the crime of illegally absorbing public deposits or the crime of fundraising fraud, and at the same time constitutes the crime of organizing or leading pyramid schemes, shall be convicted and punished in accordance with the provisions for the heavier punishment.

9. How does the revised "Interpretation" stipulate the conviction and sentencing standards for the crime of illegally absorbing public deposits and the crime of fundraising fraud by a unit?

Answer: According to the provisions of Article 176, Paragraph 2 and Article 192, Paragraph 2 of the Criminal Law, a unit may become the criminal subject of the crime of illegally absorbing public deposits and the crime of fundraising fraud. In practice, it is not uncommon for units to commit the crime of illegally absorbing public deposits and fundraising fraud, which causes serious social harm. In order to increase the punishment for the crime of illegal fundraising by units, Article 14 of the revised "Interpretation" stipulates that if a unit commits the crime of illegally absorbing public deposits or the crime of fundraising fraud, the conviction and sentencing standards for natural person crimes in this Interpretation shall apply, and the unit shall be sentenced to a fine, and the directly responsible person in charge and other directly responsible persons shall be convicted and punished.

10. How should the law be applied to cases before the promulgation of the "Interpretation"?

Answer: The "Criminal Law Amendment (XI)" has made significant revisions to the articles of criminal law concerning the crime of illegally absorbing public deposits and the crime of fundraising fraud, and it has been in effect since March 1, 2021. The revised "Interpretation" has adjusted and modified the standards for conviction and sentencing for these crimes, and it has been in effect since March 1, 2022. Given that both the Criminal Law and judicial interpretations have been amended regarding the conviction and sentencing standards for these crimes, significantly impacting their application, the following applies: For actions that occurred before the implementation of the "Criminal Law Amendment (XI)," cases that are either unprocessed or ongoing after the implementation of the revised "Interpretation" should have the applicable criminal law determined according to the conviction and sentencing standards established by the revised "Interpretation," adhering to the principle of applying the older law with leniency. It should be noted that if a defendant actively returns ill-gotten gains and provides compensation for actions predating the implementation of the "Criminal Law Amendment (XI)," the provisions of the "Criminal Law Amendment (XI)" should be applied in a manner that favors the defendant.