Business fraud: how to prove it, judicial practice

Investigation methodology

Procedural actions in case of fraud begin with declaring the fact of the crime itself, which is really important in relation to business activities. After all, in it, an incorrect interpretation of what happened or the intentions of a businessman can become the reason not for resolving the conflict in a civil manner, but for a very real prison sentence.

Therefore, the first thing that is checked is the existence of a contract in relation to which there was a failure to fulfill obligations, its legal competence and the presence of significant clarifications that can relieve liability for failure to fulfill promises not due to force majeure factors, but for completely ordinary reasons. The presence of such clarifications in the text is proof of the malicious intent of the entrepreneur, who did not want to fulfill the contract and prudently protected himself.

If the contract is in order and does not have any signs of criminal intent, it is necessary to check other essential conditions necessary for the entrepreneur to fulfill his obligations, among which the following are important:

• registration of a license if it is mandatory for the execution of the contract;
• the availability of monetary resources or a source of financing when drawing up a contract for the supply of goods that have not been paid for and the goods have been sold out;
• the presence of a delivery channel or the product itself, which was paid in advance but not delivered, etc.

If such circumstances are recorded, the presence of malicious intent and the fact of fraud are evident.

Unfortunately, our legislation is not ideal, especially with regard to fraudulent activities in business. This is what the following video is about:

How to prove business fraud?

Confirmation of the crime in such cases consists of a thorough audit of financial and permitting documents characterizing the activities of the entrepreneur. It is the unreasonableness of the financial obligations assumed, which is reflected in the accounting registers or agreements with other partners and creditors, that will be evidence of malicious actions on the part of the manager or authorized officials of the business structure or enterprise.

Due to their knowledge of the affairs of the company, executives who sign documents and get acquainted with the accounting and financial statements cannot but know about the possibility and legality of concluding a particular transaction. That is, if they knew about the circumstances that would make the transaction or the results of the contract invalid, but agreed to sign the documents, they are guilty of fraud.

How to make an application?

Any victim of the unlawful actions of an attacker, as a result of deception when concluding an agreement with an entrepreneur, can obtain protection of their rights from human rights and law enforcement agencies by writing a corresponding statement, guided by the following considerations:

1. If fraud has been committed, the fact is obvious and the victim has suffered actual damage, he should contact the police, choosing the department at the place where the crime was committed or the closest to his place of residence.
2. If, to confirm the fact of fraudulent manipulations, it is necessary to conduct an audit of the activities of the entrepreneur, it is necessary to submit a request to the prosecutor’s office with the appropriate circumstances.
3. If there is evidence of fraud and the person responsible for the crime has been identified, as well as if a pre-trial procedure has been carried out, which consists of an attempt to resolve the conflict through a claim, it is permissible to file a claim in court.

The form must indicate:

1. In the upper right corner: Information about the addressee of the application, including a sequential indication of the position of the manager, the name of the government body, and the full name of the addressee (manager).
2. Information about the applicant, who must be the victim or his authorized representative, including full name, residential address, current telephone number.
3. In the center of the sheet is the name of the document “Application”.
4. The red line is the circumstances of the incident, including all significant events and interactions with a person potentially guilty of committing fraudulent actions. Possible evidence of the attacker’s guilt is indicated, and all available documents and evidence are attached.
5. The red line indicates a request depending on the addressee - to bring to justice, conduct an audit of activities, compensate for damage, etc.
6. From the red line - all available applications are listed.
7. The document is signed in your own hand and dated.

○ What should an entrepreneur do who has fallen into a fraudulent scheme due to the fault of a counterparty?

If fraud is detected, you need to write a complaint to the counterparty demanding to fulfill its obligations. This is a pre-trial measure that serves as evidence that you tried to resolve the case amicably.

Next, you need to submit an application to the authorized bodies.

✔ Drawing up an application.

The application is drawn up in free form indicating:

• Recipient details.
• Applicant details.
• The circumstances of the case, indicating all significant actions and events.
• requirements: prosecution, compensation for damage, inspection of activities, etc.
• Evidence base.
• List of attached documents.
• The fact of familiarization with the responsibility for giving knowingly false testimony (Article 306 of the Criminal Code of the Russian Federation).
• Dates and signatures.

To make statements, share the link on social networks of your choice:

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✔ Contacting authorized bodies.

The victim can contact:

• Police on the fact of committing illegal actions.
• The prosecutor's office to initiate a review of the fraudster's statutory and financial documents.
• Court to obtain compensation for damage caused.

Punishment and article

Liability for fraud in business is characterized by duality, consisting in the following:

• punishment for such crimes is provided for in Article 159.4 of the Criminal Code of the Russian Federation, but only as amended by Part 1, if the fraud occurred before June 12, 2015, or in full for earlier offenses;
• punishment for fraudulent actions committed after June 12, 2015 and falling under parts 2 and 3 of Art. 159.4, provided for in parts 3 and 4 of Article 159.

Expert opinion

Novikov Igor Timofeevich

Legal consultant with 6 years of experience. Specializes in the field of civil law. Law teacher.

A similar decision was made by Resolution of the Constitutional Court of the Russian Federation No. 32-P dated December 11, 2014 due to the disproportion of punishment to the gravity of the crime.

The following video also contains a lot of useful information on the issue of business fraud:

Free consultation with a fraud lawyer, click here

in online chat, response in 10 minutes

Fraud is the deliberate theft of someone else's property, expressed in distortion of the truth or omission to tell it. The distinctive features of this type of criminal offense are deception and breach of trust.

Responsibility for committing selfish actions is qualified under Art. 159 of the Criminal Code of the Russian Federation. But in order to prove the fact of fraud, you should get to know the problem in a little more detail.

How to recognize fraud?

Fraud is considered to be illegal actions against individuals and legal entities. A key indicator of the fact of theft is a selfish goal - to take possession of someone else's property or the right to this property for future transactions.

Fraudulent actions are expressed in two directions (which must be proven):

1. Deception • provision of knowingly false data for further selfish intentions; • concealment of important terms of the transaction; • substitution of information or the original with fictitious things (documents); • misleading the victim in order to seize his property or rights to this property.
2. Abuse of trust • making a transaction based on trust between people (family or official ties, partnerships, friendship, etc.); • invalidity of the drawn up agreement (for example, in terms of protection of the parties from the influence of third parties); • financial or other capabilities of the fraudster, which do not give reason to consider him a selfish participant in the transaction; • willingness to fulfill their obligations (for example, after making an advance payment or the full amount of the service).

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These and a number of other grounds may be considered a fact of fraudulent activity. However, in order to prove fraud, you will need to collect certain evidence. And if in the case of online deception this is correspondence, then entrepreneurial activity requires much more serious evidence.

Business fraud

The first thing to remember is that if you do not have sufficient knowledge in the field of law and do not know the etiquette of drawing up contracts, it is best to entrust the identification of a crime to professional lawyers. The thing is that the entrepreneurial sphere has distinctive features, namely, concluding transactions through contracts and maintaining accounting.

The company's financial and accounting statements are the most important evidence base against fraud.

During the process of collecting evidence, specialists will check the agreement between the victim and the fraudster for compliance with obligations. In order to expose fraud, a legal analysis of the contract will be required. If it turns out that one of the parties deliberately did not want to fulfill the terms of the contract, then in this case it can be proven that she was dishonest in relation to the business partner.

After checking the contract, experts will conduct an analysis of the authenticity of the company’s license, a financial audit (for solvency), and the presence of the subject of the transaction (for example, goods or provision of services). Having identified a violation on one of the parties, it will be easier for specialists to prove a criminal offense under Art. 159 of the Criminal Code of the Russian Federation.

Where to go for help against fraud?

Criminal proceedings are based on the collection of evidence from law enforcement agencies. Therefore, if you encounter dishonest actions on the part of other entities, be sure to report this in writing.

You can report fraud:

1. To the police. In order to prove a crime and establish the identity of the criminal, you should contact the police. Employees will help you create an identikit of the attacker and check the database to see if the fraudster has been involved in other cases.
2. To the prosecutor's office. In some cases, it is appropriate to contact the prosecutor’s office directly, bypassing the police. Law enforcement officers will help prove fraud on an especially large scale.
3. To court. If the identity of the fraudster is already known and you have collected enough evidence, the most rational thing to do is to go to court. To do this, you need to draw up a statement of claim, attaching the collected documents to it.

What are the penalties for fraud?

Turning to the Criminal Code of the Russian Federation, you can see that Art. 159 of the Criminal Code of the Russian Federation provides an extensive list of penalties for fraud. Theft of property through deception or breach of trust is punishable by:

1. Imposition of a fine of up to 120 thousand rubles;
2. Forced labor for 180 hours;
3. Correctional labor for up to 2 years;
4. Temporary detention for up to 4 months;
5. Imprisonment for up to 2 years.

It should be noted that this is the minimum penalty that can be imposed for committing fraudulent actions. In the case of aggravating circumstances, for example, theft on an especially large scale by a group of persons, liability will be punishable by up to 5 years in prison with a fine of up to 300 thousand rubles.

“Household” or “business” fraud?

January 23, 2021 7:22 pm

Experts discussed what changes are required by the “entrepreneurial” articles of the Criminal Code of the Russian Federation

Earlier, the Ministry of Justice of the Russian Federation
appealed to the Federal Chamber of Lawyers of the Russian Federation with a request to send information about the practice of applying Articles 159–159.6 of the Criminal Code of the Russian Federation and to formulate proposals for improving Russian legislation in this part.
Advisor to the FPA RF, lawyer Evgeny Rubinshtein, speaking on the “Levchenko.Rakurs” program on RBC TV, said that in connection with this, the FPA RF sent out requests to lawyers to provide relevant data. Based on the results of studying the collected information, proposals for changes and additions to legislation will be drawn up. The lawyer explained that “fraud” (Article 159 of the Criminal Code of the Russian Federation) among lawyers is usually divided into “everyday” and “business”. In the second case, such cases do not always end successfully: the percentage of acquittals under this article is extremely low.

In addition, the Criminal Code of the Russian Federation does not have a clear interpretation of the concept of “entrepreneurship”. When Art. 159 was introduced into the Criminal Code, the question arose of how to distinguish between “household” and “business” fraud. “This problem still exists,” confirmed Evgeniy Rubinstein. – Initially, the investigator charges Part 4 of Art. 159 is “everyday” fraud, because the classification of the crime provided for by it is quite broad and provides for punishment in the form of imprisonment for a term of up to ten years.” Under this article, the court may choose a preventive measure in the form of detention, whereas this is prohibited for “entrepreneurial” fraud.

“Until recently, the courts, when choosing a preventive measure in the form of detention, could not decide for themselves whether this was a “business” or a “domestic” fraud,” the lawyer noted. – Only since January 2021, after the publication of the corresponding Review of the Supreme Court of the Russian Federation, the situation has changed. The Supreme Court of the Russian Federation indicated that the court, when resolving the issue of a preventive measure, can decide for itself: this is an “entrepreneurial” article and, therefore, it is impossible to choose a preventive measure in the form of detention, or this is “everyday” fraud.”

The Federal Chamber of Lawyers of the Russian Federation has repeatedly proposed various changes to the law. Experts agree that it is worth paying attention, first of all, to the practice of law enforcement rather than to shortcomings in legislation.

The adviser to the FPA of the Russian Federation gave an example when failure to fulfill an obligation can have both a civil and criminal aspect: “Suppose a person for some reason did not fulfill the obligation under the contract. A law enforcement officer can behave in different ways. He can conclude that the entrepreneur had a desire to fulfill the contract, but circumstances arose in which he was unable to do so; or decide that the entrepreneur, initially realizing that he will not be able to fulfill the obligation, creates the appearance of fulfillment and receives funds.”

Some conclusions can be drawn about the situation in the application of “entrepreneurial” legislation by referring to statistics on the state of crime in the country, presented by the Russian Ministry of Internal Affairs. Thus, from January to November 2021, a total of 1,920,819 crimes were registered (there is a decrease of 4.3% compared to the same period in 2021). Of these, according to Art. 159–159.6 of the Criminal Code of the Russian Federation – 204,870 (which is 6.8% higher compared to the same period last year).

For several years, the Federal Chamber of Lawyers of the Russian Federation has been preparing opinions on changes and additions to legislation, and also contributes to the formation of new judicial practice by participating in round tables on the preparation of Resolutions of the Plenums of the Armed Forces of the Russian Federation. To work on preparing proposals in Art. 159–159.6 of the Criminal Code of the Russian Federation, not only advisers of the FPA RF and members of the Scientific Advisory Council of the FPA RF, but also the entire legal community were invited. Based on the results of collecting information, some proposals for changes and additions to legislation will be prepared.

You can watch the broadcast recording here:

Part 1 https://tv.rbc.ru/archive/levchenko/5a60c0bd9a79471840d11151

Part 2 https://tv.rbc.ru/archive/levchenko/5a60c31b9a79471840d11152

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How to prove fraud under the law?

The most difficult thing that victims of fraudulent actions usually face is the need to prove the fact of theft. According to Art. 74 of the Code of Criminal Procedure of the Russian Federation, the following can be considered evidence of the fraudster’s guilt:

1. A sincere confession of committing a criminal offense is extremely rare, but it serves as the most accurate evidence of the guilt of the suspect (accused).
2. Witness testimony - suitable in cases where the theft affected not one, but several victims (for example, pensioners of the same house from “fictitious” insurers).
3. Expertise results - sometimes in order to prove the fact of selfish acts it is necessary to involve an expert.
4. Material evidence – first of all, the stolen property of the victims, as well as the means with which the fraudster committed secret thefts (computer, ATM scanner, smartphone, fake receipts, etc.).

Having figured out how to prove fraudulent intentions, all that remains is to contact law enforcement agencies or the court.

Author of the article: Petr Romanovsky, lawyer Work experience 15 years, specialization - housing, family, inheritance, land, criminal cases.

Useful information on fraud

• Bank fraud
• Deception of evidence in civil proceedings
• Falsification of evidence in arbitration proceedings
• Falsification of evidence
• Fraudsters with bank cards
• How to prove fraud
• Loan Fraud
• Fraud in the sale of land
• Sample application for falsification of evidence
• Forged documents - Criminal Code of the Russian Federation
• Petty fraud
• Forgery of signature
• Fraud in financial markets
• Fraud on a grand scale
• Criminal liability for fraud
• Apartment fraud
• Car fraud
• Phone scam
• Insurance Fraud
• Responsibility for forgery of documents
• Fraud charge
• Help for defrauded investors
• Fraud of consumers in the Criminal Code of the Russian Federation
• Fraud when applying for a loan
• Fraud Claim
• Scammers on the Internet
• Fraud in the sale of real estate
• Deal under the influence of deception
• Forgery of driver's license
• Statute of limitations for fraud cases
• Aiding fraud - article of the Criminal Code of the Russian Federation
• Maternity capital fraud
• Attempted fraud
• Forgery of sick leave
• What to do if you were deceived in an online store

3 ways to get a free legal consultation 01

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Business fraud

February 26, 2021 6:48 pm

During the next FPA webinar, lawyers were told about errors encountered in forensic investigative practice in cases of fraud

On February 26, the next webinar of the FPA of the Russian Federation was held to improve the qualifications of lawyers, during which a professor from the Department of Criminal Law of the Moscow State Law University named after O.E. gave a lecture on the topic “Fraud in Business.” Kutafina, Doctor of Law Ivan Klepitsky.

At the beginning of his speech, the lecturer said that businessmen are often held accountable for violations that they did not commit. This is due both to an incorrect interpretation of the law and to established law enforcement practice, which, according to the speaker, is also not correct.

Despite the fact that the concept of fraud is clearly defined in the law and implies the theft of someone else’s property or the acquisition of the right to it through deception or abuse of trust, errors occur in forensic investigative practice, explained Ivan Klepitsky.

As an illustration, he gave the most interesting examples. In one of them, a citizen established a joint-stock company (built a factory that produced high-tech goods). Subsequently, as a result of the recession, demand for the product fell. There was not enough working capital to pay salaries and current expenses, so the founder took out a loan. However, demand did not increase and they had to take out another loan. When the loan repayment period expired, the bank went to court to initiate bankruptcy proceedings for the plant. At the same time, a criminal case was opened against the founder for fraud, and he himself was taken into custody.

In this situation, the speaker noted, there was no damage - a mandatory sign of theft of property - as well as deception, since the founder of the plant was not hiding, and the value of the enterprise's assets significantly exceeded the amount of debt to the bank. In addition, the founder could find an investor and pay off the debt, but was deprived of the opportunity to do this while in a pre-trial detention center. According to the professor, the logic of the accusation was that since the borrower did not repay the loan, it means he caused damage.

In another example, an entrepreneur was constructing a road and invoiced the purchase of gravel according to the specifications of a factory affiliated with the local government. A clause on gravel was also included in the design documentation. The entrepreneur received the money, but did not buy gravel, but produced it using his own crusher. Local authorities, having learned about this, filed a claim in the arbitration court.

The entrepreneur won the case, since the examination did not reveal any claims regarding the quality of the work he performed. Then local authorities charged him with theft of funds not paid for the purchase of gravel. According to Ivan Klepitsky, this is a humane approach, since in practice, courts often charge the person accused of theft with the entire amount received from the account.

At the same time, the speaker noted, in the situation under consideration there is no damage, since the obligation was fulfilled properly, but there is fraud, but its circumstances are not so significant. The position of the prosecution in this case was as follows: since the obligation was properly fulfilled, the rule on fraud in business activities cannot be imputed, therefore the accused was simply charged with fraud.

Ivan Klepitsky explained that, despite the absence of signs of a crime, an acquittal in this case was impossible. The defense managed to prove the failure to fulfill contractual obligations, thanks to which the case was dismissed due to statute of limitations, but the money was still recovered from the entrepreneur through civil proceedings.

The lecturer also gave examples from practice when realtors were prosecuted for misuse of maternity capital. So, in one example, the buyer, with the help of a realtor, used maternity capital and purchased a house in the village, but did not register anyone there. The court qualified this as fraud, since in fact the citizen cashed out the money without improving her living conditions. The prosecution found other persons who also cashed out maternity capital with the help of this realtor, and charged the latter with the entire amount of the cashed certificates as theft committed by him.

In the second case, when purchasing an apartment, the buyer wanted to pay part of its cost using maternity capital. The realtor found an apartment and agreed on a price, but the seller needed the entire amount at once. Since, according to the law, money under the certificate is transferred after state registration of the right to real estate, and not to the buyer, but to the seller or lender, they decided this: the buyer paid the seller the full cost of the housing, and entered into a fictitious loan agreement with the realtor, according to which he received the money after registering the transfer of ownership and returned them, minus his commission, to the buyer. As a result, the realtor was accused of stealing state money by deception by concluding a fictitious contract.

The lecturer noted that in the cases under consideration there was no corpus delicti, and the procedure established in the resolution of the Government of the Russian Federation is so formal that maternity capital, in fact, cannot be used even for its intended purpose - to improve living conditions.

Ivan Klepitsky also gave examples related to limiting theft, fraud and embezzlement, etc. In one of them, the director of a mining and processing plant sold a batch of raw materials to an intermediary for 13 million rubles, and he, in turn, sold it to the mining and processing plant for 15 million rubles. The intermediary and the director divided the profits equally. Subsequently, the director confessed and was convicted of stealing a batch of raw materials worth 15 million rubles.

This qualification of the act, according to the speaker, contradicts common sense. In this case, there was indeed damage, but in the amount of not 15 million rubles, but 2 million rubles, since the property was not lost, but sold. Accordingly, there was a loss of profit from the sale of goods.

In this regard, Ivan Klepitsky drew attention to the legal position set out in the Resolution of the Supreme Court of the Russian Federation of November 30, 2017 No. 48, that when establishing the amount stolen as a result of fraud, misappropriation or embezzlement, the courts should keep in mind that theft property with the simultaneous replacement of it with a less valuable one is qualified as theft in the amount of the value of the seized property.

However, as the lecturer believes, for this, first of all, it is necessary that theft has taken place, and in the case under consideration there are no signs of it.

The speaker gave examples where fraud is charged in the case of stock market speculation. Thus, the shareholder deposited the securities he owned into the account of the brokerage office and issued a power of attorney to carry out transactions with them. As a result, he lost his securities, and the broker was accused of fraud and taken into custody.

At the same time, he noted: the indictment indicated that the victim, when contacting a brokerage office, expressed a desire to enter into an agreement for the provision of services on the stock market in order to receive a small profit from the placement of securities belonging to him, but did not intend to sell them, and signed a power of attorney according to inattention. The court supported his arguments. At the same time, Ivan Klepitsky emphasized, the placement of securities on the stock exchange is precisely their sale.

According to the speaker, the reasons for incorrect law enforcement practices have historical roots (the concept of theft of socialist property and responsibility for this act were introduced in 1932), and are also due to legislative gaps and a corruption component.

Concluding the lecture, Ivan Klepitsky noted that lawyers and jurists are responsible for eradicating such disgrace as bringing to justice people who have not committed illegal acts or entered into a profitable deal, so they need to fight both to protect the interests of the client and to bring reasonable limits of incorrectly established law enforcement practice.

The webinar will be repeated on Saturday, March 2.

Tatiana Kuznetsova

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Fraud in business: regulatory framework and judicial practice

Until relatively recently, the Criminal Code of the Russian Federation considered fraud in the field of business activity as an independent type of fraud, qualified under a separate article of the Criminal Code. However, legislation tends to change quickly, and Art.

159.4 of the Criminal Code, which was previously applied in such cases, has lost force. Now such acts need to be classified according to CC.

5–7 tbsp. 159 of the Criminal Code, taking into account the qualifying characteristics that are seen in the actions of the perpetrator.

The Plenum of the Supreme Court reacted quite quickly to the changes made to the Criminal Code and hastened to resolve possible difficulties in law enforcement that might arise, adopting Resolution No. 4 of November 15, 2016 and then touching on this issue in paragraph 11 of Resolution No. 48 of November 30, 2017. In particular, the judges paid special attention to the criminal procedural aspects of the investigation and the importance of defining entrepreneurship as an area of ​​crime.

To do this, you need to define entrepreneurship in accordance with paragraph 1 of Art.

2 of the Civil Code as an activity characterized by such features as:

• systematic;
• independence;
• own risk of the person carrying it out;
• commercial purpose;
• legal registration of an entrepreneur.

Expert opinion

Novikov Igor Timofeevich

Legal consultant with 6 years of experience. Specializes in the field of civil law. Law teacher.

This is an extremely important point for qualifying the crime, because if the court decides that the crime was committed outside the business sphere, then the responsibility will be completely different.

In the same resolution, one can find explanations about what circumstances confirm the criminal intent of the subject and allow one to differentiate the undesirable consequences of business risk from a crime.

Types of fraudulent transactions committed in business activities

For a better understanding of the provisions of the above part of the article and a clear distinction between fraud in business activities and violation of a civil contract, it is necessary to distinguish between the types of fraudulent transactions.

There are the following types of fraudulent transactions:

• conclusion of an agreement for the performance of certain works by the organization, although in fact the organization is not engaged in performing these works or is not engaged in financial and economic activities at all;
• drawing up an agreement with clauses that give the right not to fulfill the terms of the agreement in the future;
• When concluding a contract, hidden payments may be indicated that were not discussed in advance and about which the other party did not know and should not have known.

Enforcement Issues

Not every failure to fulfill a contract is criminally punishable. For example, if one of the companies did not fulfill the terms of the contract on time due to the fault of third parties, then in this case there is no corpus delicti.

This is where a problem arises: if you, as a conscientious entrepreneur, are unable to fulfill the terms of the agreement on time, then the counterparty will be able not only to go to court, but also to write a statement to law enforcement agencies, accusing you of fraud.

Here the question arises about the possibility of proving the fact of failure to fulfill a clause of the contract through no fault of yours. To do this, it is necessary to collect evidence to convince the court of your integrity as an entrepreneur.

That is why an entrepreneur entering into an agreement with another legal entity must understand what risks there may be if the agreement is not fulfilled, and also think in advance about how exactly the court will qualify the failure to fulfill the agreement in the event of a dispute.

Business fraud: criminal legal characteristics

Part 1 art.

159 of the Criminal Code defines fraud as the theft of someone else’s property or the acquisition of rights to it by deception or abuse of trust. Hh.

5–7 norms extended this concept to business activities. In note 4 to Art.

159 of the Criminal Code explains that in the context under consideration, fraud should be understood as a deliberate failure to fulfill obligations under contracts to which the parties are business entities: individual entrepreneurs and commercial organizations.

This allows us to draw 2 important conclusions:

1. Fraud in the field of entrepreneurial activity is committed exclusively by a special subject - an individual entrepreneur or a member of the management body of a commercial organization. The same position was voiced by the Plenum of the Supreme Court in Resolution No. 4.
2. Such crimes are committed exclusively with direct intent. That is, the person does not initially intend to fulfill the obligations under the contract that he enters into (personally or indirectly).

Objective side of the crime

The objective side of business fraud as a crime is expressed in the actions of the subject aimed at concluding contracts that will obviously not be fulfilled. On the objective side, we can distinguish the following elements that must be present simultaneously:

• receipt of material benefits, services or funds under a contract;
• inaction in relation to the fulfillment of contractual obligations or actions as a result of which the contract was not fully or improperly performed.

IMPORTANT! The specified actions (inaction) committed by a person who does not have the status of an individual entrepreneur, but who misled the injured party by convincing him of the existence of such status, are not fraud in the field of entrepreneurship and are subject to qualification under Parts 1–4 of Art. 159 of the Criminal Code of the Russian Federation.

○ Advice from a lawyer:

✔ As an individual entrepreneur, Ivanov V.A. entered into an agreement with individual entrepreneur V.N. Alexandrov. for the supply of equipment for a workshop for the restoration of art objects. In the agreement, Ivanov prescribed the grounds within which he could not fulfill his part of the deal after receiving the deposit. What should Petrov do in such a situation if Ivanov refused to fulfill the agreement?

In this case, there is an intent to fail to fulfill one’s obligations. Therefore, Petrov needs to contact the police or prosecutor’s office with a statement of fraud.

✔ What should a citizen do if he fell into a fraudulent scheme and now all the debt and contractual obligations of the individual entrepreneur Miroshnichenko have become his obligations.

Here, a lot depends on the documentation of the transfer of obligations. If all contracts are drawn up correctly and signed, it is impossible to prove fraud. But if there is a possibility of challenging them, you can go to court, which will consider the case. You can also contact the prosecutor's office, which will initiate an audit of the entrepreneur's financial activities.

Video

Specialist Anita Aksenova will talk about the objective and subjective side of fraud in business.

Published by: Vadim Kalyuzhny , specialist of the TopYurist.RU portal

Problems of proving fraud in business

As part of the evidence in the case, it is necessary to establish the following facts:

• commission of a crime by entrepreneurs;
• the existence of a civil agreement concluded between the parties;
• the presence of a goal - the illegal acquisition of goods and property;
• the amount of damage caused by the actions of the perpetrator;
• complete or partial failure to fulfill the contract;
• the presence of the defendant's intent to non-fulfill (improper fulfillment) of the agreement.

The greatest difficulty is proving intent to fail to fulfill obligations. The law does not contain a list of signs or grounds that would directly indicate its presence. But in paragraph 9 of Resolution No. 4, the Supreme Court judges explained to some extent what may indicate the presence of intent.

• the perpetrator lacks the initial opportunity to fulfill the contract;
• concealment of information about liens on property that became the subject of the agreement;
• disposal of funds received under the agreement for personal purposes;
• concluding an agreement using forged documents.

However, the presence of all these circumstances is only suggested by investigators for evaluation by the judge and is not direct evidence of fraud.

The second difficulty is related to establishing the time of the crime. Considering that most civil law agreements have a clearly established moment of execution, it is impossible to talk about actual non-fulfillment of an obligation before its occurrence.

However, since fraud is a crime with a material element, it will be considered completed from the moment the socially dangerous consequences occur, which in this case are expressed in causing property damage to the victim. Thus, the time of committing entrepreneurial fraud is the moment the defendant receives illegal benefits (money, services, etc.)

d.).

When failure to perform an obligation is fraud

Fraud, committed, as follows from the wording of Article 159 of the Criminal Code of the Russian Federation, using deception or abuse of trust, is closely related to civil law relations. In some situations, especially in cases of fraud in business activities, it is almost impossible to distinguish between the criminal and civil spheres of relations. The decision of the arbitration court will have evidentiary force in the investigation of a criminal case; the court verdict may be the main evidence in subsequent compensation for damage caused by the crime.

However, not every violation of a contractual obligation is considered fraud. Clause 4 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated November 30, 2017 No. 48 “On judicial practice in cases of fraud, misappropriation and embezzlement” states that the actions of a person are qualified as fraud only in cases where the person intends to fail to fulfill obligations or misappropriate someone else’s property in advance, that is, before the obligation arises.

In this regard, certain difficulties arise: the intent of a person, his thoughts are quite difficult to prove. Often, proof of intent is based on external signs of the act, indirectly confirming the person’s intention to fraudulently take possession of someone else’s property or money. Typical external signs on the basis of which the court can draw a conclusion about the criminal intent of a person have been developed for a long time by judicial practice. Thus, the presence of intent could be evidenced by the perpetrators’ deliberate lack of real ability to fulfill obligations, falsification of documents, conducting business through “fly-by-night companies,” and failure to repay debts on the claims of victims (Determination of the Supreme Court of the Russian Federation dated September 15, 2009 in case No. 48-009-81 ). Subsequently, these signs were enshrined in the Resolution of the Plenum of the Supreme Court of the Russian Federation dated November 30, 2017 No. 48, but were added: concealment by a person of information about the existence of debts and encumbrances of property, disposal of received property for personal purposes contrary to the terms of the contract. The list is non-exhaustive.

However, even the presence of these formal signs does not indicate that a person has committed fraud. Thus, if a significant part of the contractual obligations were actually fulfilled, the person’s actions are qualified only as a violation of civil obligations (sentence of the Kovrov City Court of the Vladimir Region dated January 10, 2013 No. 1-2013-11).

Another element of the crime is closely related to fraud - arbitrariness (Article 330 of the Criminal Code of the Russian Federation). They are recognized as causing damage through the exercise of an actual or perceived right. In this case, the person also has selfish intent, but he has any legal grounds for the seizure or disposal of property. Since the grounds for taking possession of property existed, arbitrariness is not recognized as theft, like fraud and theft. Arbitrariness does not encroach on property, but on the order of management.

Arbitrariness also differs from fraud in that the intent to misappropriate property arises after the appearance of real or alleged grounds for appropriating this property.

An example of arbitrariness can be the unauthorized disposal of pledged property if, by virtue of the law, foreclosure on this property is carried out in court (clause 26 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of November 30, 2017 No. 48) or the unauthorized seizure of another person’s car for the fact that it burned the culprit’s car, etc. (Appeal ruling of the Supreme Court of the Russian Federation dated January 14, 2020 No. 19-APU 19-16).

In any case, when considering the case, the court must find out whether the person had selfish intent and any legal basis to appropriate someone else’s property. If a person’s actions were incorrectly classified as fraud, the criminal case must be returned to the prosecutor (Appeal Resolution of the Moscow City Court dated June 24, 2019).

Sincerely, lawyer Anatoly Antonov, managing partner of the law firm Antonov and Partners.

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Criminal liability measures for fraud in business

Fraud in the field of business activity is a qualified element of fraud. Consequently, the measure of responsibility for it is much more severe than in the general composition reflected in Part 1 of Art. 159 of the Criminal Code.

So, sanctions CC. 5–7 tbsp. 159 of the Criminal Code provide a significant choice of types of punishment:

• fine;
• compulsory work;
• correctional work;
• forced labor;
• restriction of freedom (in this case used only as an additional punishment);
• deprivation of liberty.

An analysis of judicial practice has shown that sentences in cases of business fraud almost always include a fine as a punishment - if not the main one, then an additional one. This is caused not so much by the liberality of the judges, but by the purpose of this measure of influence.

Thus, the crimes in question belong to the group of economic ones and are aimed primarily at obtaining illegal benefits. Consequently, the fine in this case acts as a tool to prevent unjust enrichment.

It’s not for nothing that even Part 7 of Art.

159 of the Criminal Code, which provides for a maximum penalty under this article of 10 years in prison, determines a fine of 1 million rubles. or in the amount of 3 years of income of the convicted person as a potential additional punishment.

In practice, there are many cases when a banal failure to fulfill a contract is regarded by law enforcement agencies as fraud in business activities. From July 2021, the punishment for such a crime has become more severe.

For causing damage in a significant amount, and this is only 10 thousand rubles, you can get 5 years in prison. If the value of the “appropriated” property is more than 12 million rubles, you can go to jail for 10 years.

The so-called “entrepreneurial” article 159.4 of the Criminal Code of the Russian Federation (fraud in the field of entrepreneurial activity) was repealed in 2021. But she immediately returned to the Criminal Code in a new form. Intentional failure to fulfill an agreement concluded between entrepreneurs (legal entities) is now regulated by parts 5–7 of Article 159 of the Criminal Code of the Russian Federation.

This means that if the deadline for fulfilling obligations has arrived, and one of the participants has not fulfilled them, then the “offended” party can apply not only to the court with a civil claim, but also to the police with a statement to initiate a criminal case.

Object and subject of business fraud

 The legislator has placed the elements of fraud in the field of business activity in Chapter 21 of Section VIII of the Criminal Code of the Russian Federation “Crimes in the Economic Sphere”. Consequently, according to the logic of the legislator, the generic object of entrepreneurial fraud should be understood as relations in the economic sphere.

The result of differentiation of criminal liability for fraud depending on the sphere of social activity was the specification of the circle of victims of certain special types of fraudulent encroachment. For example, in case of fraud under Art. 159.1 of the Criminal Code of the Russian Federation, the perpetrator encroaches on the property of legal entities, and in case of fraud under Art. 159.2 of the Criminal Code of the Russian Federation - for state or municipal property. It was previously noted that a mandatory sign of a crime provided for by Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation is committed in the field of entrepreneurial activity. This sign sets the limits of the action of the hch. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, since currently these norms apply only in cases of encroachment on property (or the right to property) belonging either to an individual entrepreneur or a commercial organization. Since the circle of special victims is a criterion for defining the concept of “sphere of business activity” (in the criminal legal sense), this circumstance also narrows the direct object of criminal legal protection of the Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation.

In fact, profit-making activities can be carried out when concluding agreements not only with commercial organizations and individual entrepreneurs, but also with other organizations whose main activities are not aimed at making profit, as well as with individuals not registered as individual entrepreneurs. This was previously directly indicated by both the Supreme Court of the Russian Federation and the Constitutional Court of the Russian Federation [4]. This approach is based on the current civil legislation, which defines the essential features of entrepreneurial activity (Part 1, Article 2 of the Civil Code of the Russian Federation), and, consequently, the spheres of public life within which it is carried out.

Despite this, some practitioners during the period of validity of Art. 159.4 of the Criminal Code of the Russian Federation, an opinion was expressed about a limited interpretation of the circle of victims of fraud in the field of business activity. For example, it was proposed not to classify as business fraud those acts that resulted in the seizure of funds from citizens who do not carry out entrepreneurial activities. The rationale for this proposal was the approach according to which only an actual participant in business relations can be the injured party from fraud in the field of business activity. Thus, canceling the decision of the court of first instance and returning the case to the prosecutor, the appellate court indicated that the actions of the perpetrator were not related to the failure to fulfill the contract and were not committed in the field of entrepreneurial activity, but were aimed at stealing funds from citizens [5].

This kind of law enforcement practice is correct, because it is dictated by social necessity, and was subsequently adopted by the legislator when constructing a new rule providing for liability for fraud in the field of business activity (Parts 5–7 of Article 159 of the Criminal Code of the Russian Federation). According to the legislator, victims (as well as subjects of crime) from business fraud are only those persons who are included in the area of ​​economic relations within which they exist under the same risk conditions. So, in note 4 of Art. 159 of the Criminal Code of the Russian Federation stipulates: “The effect of parts 5–7 of this article extends to cases of deliberate failure to fulfill contractual obligations in the field of entrepreneurial activity, when the parties to the agreement are individual entrepreneurs and (or) commercial organizations.”

The legislator’s decision to narrow the circle of victims of business fraud (Parts 5–7 of Article 159 of the Criminal Code of the Russian Federation) by excluding from this list citizens who do not have the status of an economic entity is based on the prevailing socio-economic realities. Excessive flexibility Art. 159 of the Criminal Code of the Russian Federation (before the adoption of the Federal Law of November 29, 2012 No. 207-FZ and the Federal Law of July 3, 2021 No. 323-FZ) and the previously in force Art. 159.4 of the Criminal Code of the Russian Federation did not allow for proper criminal legal protection of certain property relations. In particular, the sale to citizens who are not subjects of entrepreneurial activity of apartments under construction under agreements for participation in shared construction was often qualified by the courts under Art. 159.4 of the Criminal Code of the Russian Federation, when these contracts were deliberately not executed [6]. In cases where, when citizens' funds were seized, the damage caused to them did not exceed one million five hundred thousand rubles, the act was subject to qualification under Part 1 of Art. 159.4 of the Criminal Code of the Russian Federation (a crime of minor gravity), for which the courts rarely imposed punishment in the form of actual imprisonment. Causing larger damage also did not guarantee punishment for the perpetrator. There are known cases when, as a result of the length of pre-investigation checks, by the time a criminal case was initiated or sent to court, the statute of limitations for criminal prosecution had expired, therefore, with the consent of the accused, the case was subject to termination.[1]

In addition, ordinary citizens entering into civil legal relations with entrepreneurs pursue the goal of satisfying personal (household) needs [7], while entrepreneurs strive to earn income. This circumstance emphasizes the significant difference between the legal status of the consumer and the legal status of the entrepreneur, which is reflected in civil and administrative legislation. For example, from Part 3 of Art. 401 of the Civil Code of the Russian Federation it follows that a person who fails to fulfill or improperly fulfills an obligation when carrying out business activities is liable regardless of guilt, that is, unless he proves that proper fulfillment was impossible due to force majeure; The Code of the Russian Federation on Administrative Offenses provides for liability for consumer deception (Article 14.7); The Law of the Russian Federation of February 7, 1992 No. 2300–1 “On the Protection of Consumer Rights” plays a special role in protecting consumer rights. This feature in itself is a good reason for the existence of different approaches to the criminal legal protection of property relations, depending on the sphere of social activity. Therefore, one should agree with the correct remark of A.V. Golikova, who about the position and, when paying for a product, service or work, does not know for sure what she will receive (or whether she will receive it) as a result. Only the entrepreneur has complete information” [1].

When characterizing a victim of business fraud, you should pay attention to the fact that the victim (deceived) of this crime may be a corresponding individual with the status of an individual entrepreneur, or a commercial organization, while the agreement itself, which covers this type of fraud, does not necessarily have to be concluded on the part of the victim by the owner (holder) of the stolen property, i.e., by an individual entrepreneur or a commercial organization represented by a member of the management body. Such an agreement can also be signed by a person who officially represents these business entities and has the authority to make a decision on the transfer of property or rights to property.

Thus, taking into account that fraud provided for by Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, is committed in the field of entrepreneurial activity, the content of which is established through an intersectoral analysis of the current (regulatory and protective) legislation, which significantly limits the object of criminal legal protection of this crime in comparison with the object of the general fraud, the main direct object of business fraud should be determined as a property relationship of one or another specific form, determined by the ownership of the stolen property and the limited scope of fulfillment of contractual obligations when carrying out business activities.

Adhering to the approach according to which the object of the crime is considered through the prism of social relations, I consider the analysis of the object of the crime provided for by Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, incomplete without considering the issue of its subject.

Traditionally, the subject of a crime is understood as things of the material world [2], by influencing which the offender causes harm (or creates a threat of harm) to social relations protected by criminal law. Hence, as noted by V. Ya. Tatsiy, establishing the subject of the crime facilitates the search for those social relations that were damaged by the crime committed. This determines the essential significance of this element of the crime for the correct qualification of the offense [3].

Having provided for a special composition of fraud in the field of entrepreneurial activity in Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, the legislator thereby ensured savings in the normative material of the criminal law article and freed himself from the need to list all the signs of the general composition of fraud (Part 1 of Article 159 of the Criminal Code of the Russian Federation), limiting himself to indicating only the distinctive features (failure to fulfill contractual obligations, the sphere of business activities, etc.). Thus, business fraud can be committed both in the form of theft of property and in the form of acquiring the right to someone else’s property, which, in turn, predetermines the question of the subject of this criminal attack, which can be someone else’s property or the right to someone else’s property.

The existence of a special area within which fraud is committed under Part 1. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, suggests that the subject of such a crime differs from the subject of general fraud.

It should be emphasized that the subject of fraud in the field of entrepreneurial activity is property (or the right to property) belonging to the person carrying out entrepreneurial activity. This means that without this benefit it is impossible to achieve the goals for which a particular economic entity carries out its activities. The theft of an entrepreneur's property or the illegal acquisition of the right to it creates a danger for the existence of entrepreneurial structures that have emerged in modern conditions, especially since they are considered as an important state instrument in carrying out social reforms and ensuring the economic security of Russia.

This view of understanding the subject of fraud in the field of business activity allows us to come to the conclusion about the essential significance of this element in the system of business relations. Moreover, in this case, the subject of this special type of fraud is strictly defined; it is the property (or the right to property) of persons engaged in business activities (in the criminal legal sense).

Taking into account the above, it should be stated that the subject of fraud in the field of business activity is strictly defined, it means property (or the right to property) owned by a business entity (in the criminal legal sense) and used to carry out such activities. This qualitatively distinguishes the subject of fraud provided for by the Part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation, from the subject of the general composition and other special types of fraud and allows us to identify an additional criterion when delimiting the part. 5–7 tbsp. 159 of the Criminal Code of the Russian Federation with related norms.

Literature:

1. Golikova A.V. Fraud in the field of entrepreneurial activity: a variant of deciphering the disposition // Library of criminal law and criminology. 2014.
2. Shulga A.V. Property as a subject of crimes against property and its influence on the content of the object of these crimes // Russian investigator. 2012.
3. Tatsiy V. Ya. Object and subject of crime according to Soviet criminal law. Kharkov: Vishcha School (publishing house at KhSU), 1988.
4. Review of judicial practice on the application of the Federal Law of November 29, 2012 No. 207-FZ “On Amendments to the Criminal Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” and State Duma Resolution of July 2, 2013 No. 2559–6 GD “On announcement of amnesty";
5. Cassation resolution of the Presidium of the Primorsky Regional Court dated November 28, 2014 in case No. 4U-3299/2014.
6. Resolution of the Presidium of the Vologda Regional Court dated November 25, 2013 in case No. 44-u-111.
7. Sergei Polonsky, Alexander Paperno, Alexey Pronyakin were found guilty of fraud. URL: https://www.mos-gorsud.ru/rs/presnenskij/news/sergej-polonskij-aleksandr-paperno-aleksej-pronyakin-priznany-vinovnymi-v-moshennichestve.

[1] Thus, due to the expiration of the statute of limitations for criminal prosecution, the court released the convicted Sergei Polonsky, Alexander Paperno, Alexey Pronyakin from the imposed punishment (Clause 3, Part 1, Article 24 of the Code of Criminal Procedure of the Russian Federation) for the crime they committed under Art. 159.4 of the Criminal Code of the Russian Federation.