On April 13, 2026, the People’s Procuratorate of a certain locality issued Decision No. [2026] 39 on Non-Prosecution: “ The party, knowing full well that a third party had not jointly constructed a cold storage facility with him, nevertheless assisted that party in defrauding state subsidy funds. His actions violated Article 266 of the Criminal Law and constituted the crime of fraud; however, the circumstances of the crime were minor, he made a full confession, and he acted as an accessory in the joint criminal act. Pursuant to Article 37 of the Criminal Law, no criminal punishment is required. In accordance with the second paragraph of Article 177 of the Criminal Procedure Law, it is decided not to prosecute him.”
After enduring two years of grueling legal proceedings, the private entrepreneur in this case has been cleared of the risk of criminal prosecution. Handled by Attorney Zhang Qingsheng of Beijing King&Capital (Shanghai) Law Firm, this case involving alleged fraud spanned nearly two years—from the client’s criminal detention on May 12, 2024, and release on bail pending trial on May 15 of the same month, through the public security authorities’ transfer of the case for prosecution on May 13, 2025, to the procuratorate’s decision on relative non-prosecution on April 13, 2026. The prosecutor did not entirely dismiss the fraud charges but, based on a combination of factors—including “accomplice status, full confession, minor circumstances, and full refund”—issued a decision not to prosecute pursuant to Article 177, Paragraph 2 of the Criminal Procedure Law.
This case involved corporate criminal risks arising from the application for Huinong cold chain subsidies. The defense counsel focused on three core grounds—the client’s status as an accessory in a joint crime, the circumstance of confession, and the minor nature of the offense—to clearly delineate the statutory boundaries between criminal liability and the decision not to prosecute. Supported by a complete, closed-loop chain of evidence, this approach ultimately led to the procuratorate’s decision not to prosecute, thereby legally safeguarding the legitimate rights and interests of the private entrepreneur.
I. Basic Facts Regarding the Client and the Case
(1) Identity of the Client
The client is the actual controller of two local agriculture-related enterprises and, prior to the incident, was a private entrepreneur in the agricultural product processing sector who had been deeply rooted in the local community for decades.
(2) Project Background and Application Process
The food company under the party’s actual control is designated as a “Shandong Provincial High-Tech Enterprise” and a “Municipal-Level Leading Enterprise in Agricultural Industrialization.” The supporting cold storage facility, with a total investment of over 12 million yuan, is one of the larger cold-chain facilities in the area. Construction of the cold storage facility began in phases in 2018, and all equipment commissioning was completed in December 2021.
On August 11, 2020, the local Bureau of Agriculture and Rural Affairs issued a local implementation plan for cold chain facility construction subsidies based on directives from higher authorities. The plan provided subsidies for storage and preservation facilities completed after January 1, 2020, by model family farms and model cooperatives at the county level or above, with a maximum subsidy of 1 million yuan per entity, disbursed at 30% of the total project cost.
Starting in July 2020, the former deputy director in charge of the local Bureau of Agriculture and Rural Affairs, along with the former head of the Operations Division, led a team to conduct an on-site visit to the cooperative in question. They proactively informed the cooperative that special agricultural subsidy funds were available in the jurisdiction and that eligible entities could apply. During the visit, the cold storage facility was still under construction, and the two officials explicitly confirmed on-site that the facility under construction met the application criteria. Subsequently, the head of the Operations Division provided ongoing guidance via online communication tools throughout the process to revise and supplement the application materials. He also took the lead in coordinating a joint application between the cooperative in question and a third-party family farm. The two entities prepared their materials and underwent acceptance inspections independently, subsequently receiving fiscal subsidies of 500,000 yuan and 300,000 yuan, respectively.
(III) Case Filing, Prosecution, and Compulsory Measures
In 2024, the discipline inspection and supervision authorities conducted a special audit of the distribution of agricultural subsidies, extending the audit to multiple agricultural business entities; the cooperative in this case was included in the scope of the audit. On May 12, 2024, the party involved was placed under criminal detention by the local public security bureau on suspicion of fraud; on May 15 of the same month, the compulsory measure was changed to release on bail pending trial. On May 13 and 15, 2024, the third party and the defendant, respectively, fully refunded the corresponding subsidy funds to the government. On May 13, 2025, the investigation into this case was concluded and transferred to the local procuratorate for review and prosecution; on the same day, the procuratorate extended the defendant’s bail pending trial.
II. Prosecution’s Charges and Points of Controversy
The logic of the charges during the investigation and review-for-prosecution stages is divided into two points: First, both the cooperative and the third party’s farm cold storage facility had long been completed; the discrepancies in the completion dates recorded in the application materials constituted fabricating facts and concealing the truth to fraudulently obtain state special funds. Second, as the de facto head of the cooperative, the defendant knowingly led the application process despite being aware that the construction timeline did not match the information provided, thereby constituting the crime of fraud under Article 266 of the Criminal Law.
After the defense counsel reviewed the case files and met with the defendant on multiple occasions, they broke down the core issues of the case into three independent legal propositions, any one of which, if established, could block the prosecution or exempt the defendant from criminal punishment:
Proposition 1: Does the defendant’s cooperative have a legal basis for claiming the 500,000 yuan subsidy on its own behalf?
Proposition 2: What is the defendant’s role as an accomplice in the third party’s claim for the 300,000 yuan subsidy?
Issue 3: Can the original intent of the agricultural subsidy policy and the judicial objectives of criminal prosecution be reconciled?
III. Dual-Track Defense Strategy: Breakthroughs on Separate Fronts
In response to the three disputed propositions, the defense counsel adopted a defense strategy of “breaking through each line separately, without interlinking them”: regarding Proposition 1, arguing that there were no facts constituting a criminal offense; regarding Propositions 2 and 3, acknowledging the objective acts of assistance but asserting that prosecution should be waived even if a crime were established.
(1) Regarding Proposition 1: The cooperative’s own application was compliant, and there was no subjective intent to commit fraud
The defense argued from three dimensions: policy documents at the national, provincial, and county levels; the administrative authorities’ end-to-end application process; and the actual construction of the cold storage facility. They contended that the cooperative’s application for a 500,000 yuan subsidy fully complied with policy requirements, was actively guided by the competent administrative authorities throughout the process, and was conducted with their on-site knowledge. They argued that the textual inaccuracies in the application materials regarding the construction timeline were merely a matter of administrative procedural correction and did not constitute “fabricating facts to defraud property” under criminal law.
(2) Regarding Propositions 2 and 3: The portion of the subsidy involving a third party constitutes joint criminal liability, but the defendant is an accessory, has made a full confession, and the circumstances are minor
The decision not to prosecute determined that the defendant engaged in objective acts of assisting a third party in defrauding subsidies. Rather than disputing whether the elements of the crime were met, the defense argued that the defendant should be exempt from criminal punishment based on three factors: status as an accessory, conduct upon apprehension, and the consequences of the harm. Ultimately, the procuratorate fully accepted these arguments:
1. Status as an accessory: The cooperative and the third-party farm maintained only a business relationship; there was no prior conspiracy. The defendant merely complied with the arrangements of the agricultural authorities and, upon receiving a report from a subordinate, agreed to assist with the application. The defendant did not actively plan the fraudulent application, did not participate in the distribution of subsidy funds, and derived no profit whatsoever; the 300,000 yuan subsidy was directly disbursed to the third party’s account, and neither the defendant nor the cooperative received any portion of the funds.
2. Full Confession: After being taken into custody, the defendant provided a complete and truthful account of all facts of the case, objectively detailing how administrative authorities guided the application process from start to finish and describing his own role in assisting with the application. This meets the criteria for a “full confession” as defined in Article 67, Paragraph 3 of the Criminal Law.
3. Minor Circumstances: Both subsidy payments were fully refunded to the treasury after the case came to light, resulting in no actual loss to state property; the total amount involved was limited, and the defendant played only a minor and auxiliary role.
IV. A Five-Tiered, Closed-Loop Evidence System: A Solid Foundation
The procuratorial organ’s decision to grant a conditional non-prosecution was based on a complete chain of evidence comprising five categories—established by the defense counsel—that mutually corroborate one another and contain no logical gaps. The specific classifications are as follows:
(1) Four-Tier Policy Documents
Three top-level policy documents on cold-chain facility construction issued by the Ministry of Agriculture and Rural Affairs, along with two supporting implementation plans from Shandong Province, form a unified chain of policy regulations. These clearly establish the rules that “projects completed after January 1, 2020, are eligible for application; funding is provided on a ‘build-first, reimburse-later’ basis; the subsidy ratio shall not exceed 30% of the total construction cost; and the upper limit per entity is 1 million yuan.” The cooperative in question is a county-level model business entity that made genuine investments in the cold storage facility amounting to tens of millions, and is fully qualified to apply for the subsidy.
(2) Electronic Communication Evidence Showing Full Leadership by the Agricultural Bureau
Complete online chat records from July to August 2020 between the cooperative’s project manager and the responsible official at the Bureau of Agriculture and Rural Affairs fully document the entire application process: the staff member proactively informed the cooperative that the cold storage facility under construction was eligible for subsidies and sought confirmation of the policy guidelines from the supervising leader; they proactively distributed application templates and reviewed the materials item by item; they reviewed all application materials; and they took the lead in coordinating the joint application by the two entities. This evidence directly proves that the administrative agency was fully aware of the cold storage facility’s actual construction status throughout the process and was not misled by false materials, thereby severing at its root the causal relationship required for the crime of fraud.
(3) Complete Set of Construction Investment Documentation for the Cold Storage Facility
The defense counsel submitted dozens of commercial documents—including construction contracts, value-added tax invoices, and bank payment receipts from 2019 to 2021—to verify that construction of the cold storage facility proceeded in phases and involved substantial, genuine investments: 2019 procurement contracts for refrigeration equipment and insulation panels; 2020 contracts for cold storage supporting facilities and factory renovations; and 2021 documentation of supplementary expenditures for equipment commissioning. All of these documents cross-corroborate the long-term, continuous construction of the cold storage facility and its genuine commissioning and operation, while subsequent maintenance contracts further attest to its ongoing use.
(IV) Evidence of Fund Refunds and Flow
All fiscal subsidy funds were used for cold storage expansion, site renovation, and other cold chain supporting projects; the cooperative and the third-party farm each refunded the subsidies in full, resulting in no actual loss of fiscal funds; the 300,000 yuan subsidy at issue in this case was disbursed directly to a third-party account, and neither the defendant nor the cooperative obtained any economic benefit, which supports the defendant’s status as a minor accomplice and the minor nature of the offense.
(V) Judgments in Similar Cases and Prosecutorial Normative Documents
The defense counsel submitted four categories of authoritative norms and judicial documents to establish a unified standard for the application of the law:
1. Supreme People’s Court Case No. (2018) Supreme Court Criminal Retrial No. 3 (Zhang Wenzhong Case): Although there were flaws in the administrative process, there was no act of fabricating facts to defraud fiscal funds, and thus the act did not constitute the crime of fraud. This is consistent with the spirit of the ruling regarding the cooperative’s application for its own subsidies.
2. Liaoning Provincial High People’s Court (2023) Liaoxing Zai No. 1, Liu Moumou Case: In handling criminal cases involving subsidies, a comprehensive assessment must be made by considering the policy context, the level of awareness of the disbursing authority, and the actual use of the special funds. In this case, all funds were used for real-economy industries, and the policy’s objective of providing support was fully realized.
3. Hubei Provincial High People’s Court (2021) E Xing Zhong No. 208, Liu Moujia et al. Case: Where a project meets the basic eligibility criteria for subsidies and only non-critical information in the application materials is inaccurate, a conviction for fraud is generally not imposed. In this case, the cold storage facility was actually constructed and put into operation, and the textual discrepancies constituted non-critical issues in the materials.
4. Guidance on Special Case Handling by the Henan Provincial People’s Procuratorate: Where a project meets the basic policy requirements, contains only minor inaccuracies in secondary materials, and the funds are used for production and operations, criminal liability should not be pursued; where ambiguous policy provisions lead to misunderstandings on the part of the applicant, criminal liability is not pursued—this directly applies to the circumstances of the inaccuracies in the construction timeline in this case.
V. Key Points of the Decision Not to Prosecute
On April 13, 2026, the local procuratorate issued Decision No. [2026] 39 on Non-Prosecution. The core content is summarized as follows:
(I) Determination of the Nature of the Conduct
The document evaluates the two subsidy claims separately: Regarding the 500,000 yuan subsidy claimed by the cooperative, no fraudulent conduct was found; Regarding the 300,000 yuan subsidy involving a third party, the decision determined that the defendant assisted in defrauding support funds, which meets the objective elements of the offense under Article 266 of the Criminal Law; this determination is fully consistent with the defense counsel’s dual-track defense strategy.
(2) Legal Grounds for Non-Prosecution
The procuratorate fully accepted the defense counsel’s three grounds for leniency:
1. The circumstances of the crime were minor;
2. The defendant made a full confession after surrendering;
3. The defendant acted as an accessory in the joint criminal offense.
4. Pursuant to Article 37 of the Criminal Law (criminal punishment may be waived for minor offenses) and Article 177, Paragraph 2 of the Criminal Procedure Law (prosecution may be waived if the offense is minor and does not warrant a criminal sentence), the defendant was granted a conditional non-prosecution.
VI. Case Review: Meticulous Defense on Both Substantive and Procedural Grounds
The decision not to prosecute in this case was achieved through the defense team’s meticulous work in three areas: evidence, legal reasoning, and communication:
(1) Evidence First: Dismantling the Charges with a Multi-Layered Chain of Evidence
The defense did not rely solely on legal reasoning but integrated evidence from five key dimensions: policy regulations, online communication records, project financial documents, binding judicial precedents, and fund flow records. Electronic records of administrative guidance on subsidy applications directly refuted the causal link between the cooperative’s self-claimed subsidies and fraud; refund vouchers and documentary evidence of fund flows solidified the factual basis for establishing that the client acted as an accessory in assisting with subsidy claims and that the circumstances were minor.
(2) Layered Legal Analysis: A Two-Pronged Defense to Precisely Distinguish the Facts
Rather than adopting a single defense strategy of outright denying the crime, the defense separated the two subsidy claims based on the evidence and defended them individually: for the self-applied subsidy, the defense maintained that it involved only administrative irregularities and no criminal fraud; for the portion involving assistance in applying for others’ subsidies, the defense directly addressed the objective conduct and focused on seeking leniency and exemption from liability. This layered defense approach avoided direct confrontation with the objective evidence and provided clear legal support for the procuratorate to apply the provisions for non-prosecution.
(3) Professional Communication: Continuous Coordination to Align with Unified Judicial Guidelines
During the review and prosecution stage, the defense counsel submitted multiple versions of written defense briefs and supplementary evidence materials, clearly arguing the facts and legal basis for the client’s status as an accessory. Simultaneously, they conveyed the procuratorial policies regarding minimizing arrests, exercising caution in prosecution and detention, and protecting the private economy in accordance with the law, ensuring that the case handling aligned with the prudent judicial approach toward economic crimes involving enterprises.
VII. Case Summary:
Precisely Defining the Boundary Between Criminal Offenses and Non-Prosecution
The significance of this case lies not in a blanket rejection of the fraud charges, but rather in the proper application of Article 37 of the Criminal Law and Article 177, Paragraph 2 of the Criminal Procedure Law—under the premise that the objective conduct meets the elements of a crime—to achieve a compliant pathway of “determining that the conduct constitutes a crime but refraining from criminal prosecution.”
(1) Common Misconceptions in Handling Cases Involving Agricultural Subsidies
Irregularities in administrative application procedures or omissions in documentation do not directly equate to criminal fraud. When handling similar cases, judicial authorities and defense counsel must rigorously verify the facts, evidence, and legal application: if the project was genuinely implemented, the subsidies were used for actual business operations, and the competent authorities were fully informed and approved the process throughout—but only minor textual flaws in the documentation or secondary acts of assistance exist—the matter should be addressed on a tiered basis: flaws in the direct application should be prioritized for resolution through administrative rectification and refunds; for minor acts of assistance, the need for criminal punishment should be determined by comprehensively evaluating the role as an accomplice, the harmful consequences, and the defendant’s attitude toward admitting guilt, thereby preventing the simplistic criminalization of administrative violations.
(2) A Model Case of Judicial Protection of Private Entrepreneurs’ Rights
The enterprise controlled by the defendant is a municipal-level leading agricultural enterprise and a high-tech enterprise that has driven income growth and employment for thousands of farming households through its industrial model. The decision not to prosecute in this case serves as a model example of the procuratorial authorities’ commitment to protecting private enterprises and prudently handling economic crimes involving businesses.
(III) Demonstration of the Professional Value of Criminal Defense
Comprehensive evidence review, precise legal argumentation, and routine professional communication with judicial authorities are key pillars for ensuring fair treatment of private enterprises. The decision not to prosecute in this case averted multiple adverse consequences—including criminal liability for the entrepreneur, disruption of business operations, and loss of employment for farmers—and fully demonstrates the professional value of criminal defense in upholding fairness and justice.
