Recently, the first-instance verdict was handed down in a case involving fraud of an exceptionally large amount handled by Attorney Qian Hao. After two court hearings and four rounds of supplementary investigation (two during the prosecution review phase and two during the trial phase), and despite the client’s refusal to plead guilty or accept punishment, failure to return ill-gotten gains or provide restitution, and the absence of statutory grounds for a reduced sentence, the defense achieved a significant outcome through strategic adjustments and a focused defense approach. This resulted in the charges being amended from “fraud involving an exceptionally large sum” (carrying a potential sentence of over ten years) to “contract fraud,” ultimately leading to a sentence of four and a half years.

 

 

 

I. Stepping In at a Critical Moment:

 

Establishing a Three-Dimensional Defense Framework During the Prosecution Review Stage

 

 

 

This case originated from a civil dispute. The defendant, Mr. A, was friends with several victims and maintained close financial ties with them. Through Mr. A’s introduction, several victims agreed with him to entrust funds to him for investment, with Mr. A guaranteeing the return of the principal and a certain amount of profit. Subsequently, without signing a written contract, the victims transferred funds to accounts designated by A. Prior to the incident, A had been in prolonged negotiations with several victims regarding the matter, signing promissory notes and repayment plans, but consistently failed to repay as agreed. After the incident, A argued to the public security authorities that the relationship between the parties was a loan arrangement and denied the existence of any agreements regarding the use of the funds. A was subsequently approved for arrest by the procuratorate.

 

 

 

After Mr. A’s arrest, his family continued to believe that the relationship between Mr. A and the victims was a loan arrangement among friends, constituting a civil dispute rather than a criminal offense. After careful consideration, they decided to retain Attorney Qian Hao to handle the case. At the time of his involvement, Mr. A had already been in custody for over a month. Following an initial meeting with Mr. A and preliminary communications with the public security authorities, the case was quickly transferred to the procuratorate for review and prosecution.

 

 

 

After reviewing the case files, Attorney Qian Hao discovered that Mr. A’s defense—that the relationship between the two parties was a loan arrangement—not only lacked evidentiary support but would actually have a negative impact on the case’s handling. Therefore, after thorough communication with Mr. A, he swiftly formulated a three-dimensional defense strategy focusing on “characterization, amount, and circumstances”:

 

 

 

1. Characterization Defense: Starting with the elements of the crime, systematically deconstructing the logic underlying the establishment of the crime of fraud to demonstrate that the case did not meet the core elements of fraud;

 

 

 

2. Amount Defense: Cross-checking every transaction in the case’s financial records, excluding non-criminal civil transactions, and reducing the unreasonably high amounts attributed to the case;

 

 

 

3. Circumstances Defense: Delving deeply into the details of the case, he established the fact that the defendant voluntarily surrendered after being notified by telephone, and sought to have the circumstance of “voluntary surrender” recognized in accordance with the law.

 

 

 

At the same time, Attorney Qian Hao engaged in comprehensive discussions with the prosecutor regarding the legality of investigative actions, as well as the legality and authenticity of the evidence on file. He successfully persuaded the prosecutor to return the case for supplementary investigation twice, extend the review and prosecution period three times, and adjust the amount of the alleged crime as submitted by the public security authorities. However, the procuratorate still maintained that Defendant A had committed fraud involving an exceptionally large amount, that he did not qualify for the mitigating circumstance of self-surrender (based on his refusal to plead guilty and accept punishment), that his sentence should be ten years or more, and that the case should be transferred for prosecution.

 

 

 

II. Trial Strategy:

 

Using Defense Arguments to Facilitate Negotiations During Two Court Hearings, Achieving Breakthroughs on Both the Charge and Sentence

 

 

 

After the case was transferred to the court, Attorney Qian Hao immediately contacted the judge for preliminary communication. He submitted a motion to obtain evidence regarding outstanding issues from the prosecution review phase, successfully urging the court to remand the case to the procuratorate for supplementary investigation prior to the trial.

 

 

 

During the trial, Attorney Qian Hao conducted a comprehensive cross-examination of all evidence in the case, examining its legality, authenticity, probative value, and intended purpose. He also presented detailed defense arguments.

 

 

 

1. Subjective Aspect: Person A acted out of negligence due to carelessness; Person A naively trusted others and did not possess the criminal intent to commit fraud; Person A did not have the intent to illegally appropriate property. Although the use of the relevant funds did not conform to the agreement, it was, in fact, a substitution of high-risk uses with low-risk ones.

 

 

 

2. Causation: Multiple victims were adults who had long been engaged in commercial and financial activities. Although Person A made some inaccurate statements, these did not lead the victims to form a mistaken belief, much less cause them to dispose of their property as a result.

 

 

 

3. Amount Involved: The financial transactions between Person A and the victims were complex, and there were instances where amounts related to general civil disputes were erroneously classified as part of the criminal proceeds.

 

 

 

After the first court hearing, the court once again remanded the case for supplementary investigation. The prosecution supplemented the case with a large amount of incriminating evidence, primarily to prove that Person A was a discredited judgment debtor, had a habit of extravagant spending, had long been insolvent, and lacked the ability to repay debts—thereby strengthening the allegation of “intent to illegally appropriate property.” At the same time, the public security authorities re-interviewed key witnesses in the case, generating a substantial amount of incriminating evidence.

 

 

 

During the second court hearing, in response to the new evidence presented by the prosecution, Attorney Qian Hao systematically refuted each piece of evidence, addressing its lack of relevance as well as the unreasonable and untruthful aspects of its content. Furthermore, after thorough consultation with Mr. A and based on the specific circumstances of the case, the defense strategy was adjusted to seek a reduction in the charge. The defense proactively proposed to the court that charging Mr. A with contract fraud would better reflect the facts of the case, arguing that although no written contract had been signed between Mr. A and the victim, the parties had reached a verbal agreement that had been effectively fulfilled, and Mr. A’s actions had also had a certain impact on market order.

 

 

 

Following discussions between the attorney and the prosecution and the court, this proposal was ultimately adopted through an amendment to the indictment by the prosecution, changing the charge from “fraud” to “contract fraud.” During the court proceedings, the attorney successfully secured recognition of the “voluntary surrender” mitigating circumstance for Mr. A. Ultimately, without requiring restitution or compensation, Mr. A received a sentence of four and a half years’ imprisonment.

 

 

 

III. A Brief Discussion on Key Distinctions Between Contract Fraud and Fraud

 

 

 

Distinguishing between the crime of contract fraud and the crime of fraud has long been a challenge in judicial practice. Not only do different courts arrive at different determinations, but even different judges within the same court, or the same judge at different times, may reach differing conclusions. Based on currently valid and exemplary publicly available case law, the following key distinguishing points can be preliminarily summarized:

 

 

 

1. Whether a contract was utilized is the key distinguishing factor; contract fraud can be established even in the absence of contract-related economic activities

 

 

 

Whether the fraudulent conduct occurs during the process of signing or performing a contract, and whether the form of a contract is exploited to defraud public or private property or property-related benefits, are the key factors in distinguishing the crime of contract fraud from the crime of fraud. At the same time, according to an article published in *People’s Justice*, when a perpetrator uses a contract as a pretext to defraud others of property, they have already disrupted the market expectations formed on the basis of contractual reliance interests and infringed upon the market economic order. The fact that the perpetrator did not engage in economic activities related to the contract does not affect the establishment of the crime of contract fraud.

 

 

 

2. The Crime of Contract Fraud Infringes Upon Market Order; the Target of the Fraud Must Be Related to the Contract

 

 

 

From the perspective of the legal interests infringed, the crime of fraud infringes upon the ownership of public and private property, whereas the crime of contract fraud infringes upon both the state’s regulatory order over economic contracts and the ownership of public and private property. The crime of fraud is stipulated in Chapter 5 of the Criminal Law, “Crimes Against Property,” and its object of the crime is the ownership of public and private property; in contrast, the crime of contract fraud is stipulated in Chapter 3 of the Criminal Law, “Crimes Against the Socialist Market Economic Order,” Section 8, “Crimes Disrupting Market Order.” In addition to infringing upon the ownership of public and private property, the object of the crime of contract fraud also includes disrupting the market order in the field of contract management. The property obtained through contract fraud must be the subject matter of the contract or property related to the contract; it is a consequence arising from the performance or execution of the contract.

 

 

 

3. Verbal contracts may constitute contract fraud, but contracts that are not transactional in nature cannot constitute contract fraud

 

 

 

Both oral and written contracts are legally valid and equally protected by law. When defining the scope of contracts for the crime of contract fraud, one should not be bound by the form of the contract. Where evidence proves the existence of a contractual relationship, even an oral contract—provided it occurs in the realm of production and business operations and infringes upon market order—should likewise be prosecuted as contract fraud.

 

 

 

Various “contracts” and “agreements” that are unrelated to market order and are not primarily governed by market mechanisms—such as gift contracts that are not transactional in nature, as well as agreements concerning personal status relationships (e.g., marriage, guardianship, adoption, and support), and labor contracts and administrative contracts primarily governed by labor law and administrative law—should generally not be considered “contracts” for the purposes of the crime of contract fraud.