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  • Writer's picturePham Ba Thien

Recent Practices in Legal Interpretation and Crime Determination related to Fraudulent Misappropriation of Assets and Abuse of Trust to Misappropriate Assets



In recent years, Vietnam's judicial sector has initiated and brought to trial many significant economic criminal cases that have garnered special public interest, revolving around the crimes of Fraudulent Misappropriation of Assets and Abuse of Trust to Misappropriate Assets. Notable cases include those occurring at Alibaba Real Estate Joint Stock Company, related to the Chairman of Tan Hiep Phat Group, related to Tan Hoang Minh Group, the major case at Van Thinh Phat Group, and Saigon Joint Stock Commercial Bank (SCB), all involving prosecutions related to the crimes of Fraudulent Misappropriation of Assets and Abuse of Trust to Misappropriate Assets. In practice, determining an act constituting the crime of Fraudulent Misappropriation of Assets or Abuse of Trust to Misappropriate Assets remains a significant challenge for both judicial officials and the legal profession.


This article provides a brief commentary on the crimes of Fraudulent Misappropriation of Assets and Abuse of Trust to Misappropriate Assets as stipulated in Articles 174 and 175 of the Criminal Code, reflecting the author's subjective viewpoint related to the interpretation, prosecution, and trial practices of the prosecuting bodies regarding these two crimes in recent years.


1. THEORETICAL BASIS

According to Articles 174 and 175 of the current Criminal Code:

  • Fraudulent Misappropriation of Assets is the act of a criminal using deceptive acts such as creating non-existent circumstances, lying, or forging documents to misappropriate assets. Example: Individual A impersonates a legal representative of a large company to sign a contract for goods supply, collects a large sum of money, and then absconds with the misappropriated amount.

  • Abuse of Trust to Misappropriate Assets is the act of a criminal using deceptive acts or absconding to misappropriate assets that are not owned by the criminal after being legally entrusted, received, or managed. Example: Individual B, a chief accountant, uses the company's funds for personal investments without the company's consent.


Accordingly, the crimes of Fraudulent Misappropriation of Assets and Abuse of Trust to Misappropriate Assets share the following similar elements:

(i) both crimes infringe upon the legitimate property rights of individuals or organizations. The property includes money, goods, valuable papers, and other property rights.

(ii) the criminal uses deceptive acts to misappropriate the property of the property owner, leading to consequences as stipulated in Articles 174 and 175 of the Criminal Code for each corresponding crime.

(iii) the criminal is an individual of legal age responsible under the law.

the criminal intentionally and directly commits the crime, being aware of the consequences and desiring those consequences to occur.

(iv) the criminal intentionally and directly commits the crime, being aware of the consequences and desiring those consequences to occur.


From a theoretical perspective, assessing "deceptive acts" of the crime plays a crucial role in determining whether an act constitutes the crime of Fraudulent Misappropriation of Assets or Abuse of Trust to Misappropriate Assets.


For Fraudulent Misappropriation of Assets, the criminal has already engaged in deceptive acts before receiving assets from the victim. Typically, these tactics manifest as the criminal presenting false or inaccurate information to deceive the victim, leading them to trust the misinformation and consequently hand over assets to the criminal, ultimately resulting in asset misappropriation. An example from a recent significant economic criminal case is the case at Alibaba Real Estate Joint Stock Company. According to the criminal verdict number 607/2022/HS-ST pronounced on 29 December 2022 by the People's Court of Ho Chi Minh City certain acts constituting the crime of Fraudulent Misappropriation of Assets are easily identifiable, such as:

  • relating to the majority of projects sold by Alibaba to investors, the accused in the case created projects and marketed them immediately after their companies received the transfer of agricultural land and had made deposits to the transferors, but the land had not yet undergone procedures for updating changes or registering the transfer of land use rights. This means the same plot of land, whose registration for transfer of using right had yet to be done, was sold to multiple victims by Alibaba;

  • the companies of the Alibaba group had purchased hundreds of hectares of agricultural land, which is not allowed to be converted for residential use, and then proceeded to subdivide the land into plots, arbitrarily creating nonexistent real estate projects, naming them, and then offering them for sale to investors as victims in the project.


For Abuse of Trust to Misappropriate Assets, the criminal does not have the motive or intention to misappropriate assets before and at the moment of receiving the assets, but rather the intention to misappropriate arises after receiving the assets. In other words, the criminal receives the assets through a legitimate transaction such as borrowing assets, but when it is time to return the assets, the criminal employs deceptive tactics and seeks to misappropriate those assets. A practical example is the case of Tan Hiep Phat Group. In this case, the defendants, including the Chairman of Tan Hiep Phat Group and his daughters, had provided loans to businesses in need of capital for investment projects (mostly real estate projects). However, instead of signing loan contracts, the group of defendants required the borrowers to sign contracts for the transfer of their entire projects in need of investment capital, essentially as collateral for the debt obligation. However, when the borrowers had fulfilled their debt repayment obligations, the group of defendants provided numerous unreasonable reasons to refuse to return the projects, claiming that the borrowers had violated the agreement and thus lost the right to reclaim the projects, thereby committing the act of misappropriating assets.


2. INVESTIGATION, PROSECUTION, AND TRIAL OF CRIMINAL CASES RELATED TO ASSET MISAPPROPRIATION IN PRACTICE

Due to the many similarities in the composition of the crimes, in practice, prosecuting bodies sometimes confuse the designation of criminal charges in cases where the legal characteristics distinguishing the two crimes, as analyzed above, do not clearly manifest, or in more complex situations where the criminal act involves elements of both fraud and abuse of trust to misappropriate assets.


In practice, there have been instances where, in two cases with the same criminal act and relatively similar methods of execution, the prosecuting bodies in both cases designated different criminal charges, for example:

  • A case in 2020 in Nghe An Province, the accused had signed a car rental contract with a rental shop for a term of 07 days. Upon expiration, the individual requested an extension of the contract. After extending, due to the need for money, the individual unilaterally took the car to a pawnshop, providing false information to the pawnshop owner that the car was registered in a relative's name. The incident was exposed after the car owner requested termination of the rental contract, and the individual was then prosecuted for "Abuse of Trust to Misappropriate Assets" by the competent court.

  • Another case in 2021 in Ha Tinh Province with quite similar circumstances to the above case. The criminal rented a car for 10 days from the car owner. Upon expiration, the individual also requested an extension. After extending, also due to the need of money to pay debts, the individual forged the vehicle registration documents and pawned the car. The pawnshop owner was deceived by the forged documents and accepted the car, giving money to the criminal. The incident was also exposed when the car owner requested the termination of the rental contract. However, in this case, the criminal was prosecuted for "Fraudulent Misappropriation of Assets".


From the two examples above, it is clear that the same criminal act resulted in different criminal charges, lacking uniformity by the prosecuting bodies. It is important to note that the penalties for "Fraudulent Misappropriation of Assets" are more severe than for "Abuse of Trust to Misappropriate Assets", so accurately identifying the criminal charge is crucial for the accused.


As of the present, the Supreme People's Court has issued certain circulars unifying the trial viewpoint for crimes related to asset misappropriation. However, these clarifications revolve around certain specific and frequently occurring legal situations and do not provide a general guideline for determining crimes or distinguishing between "Fraudulent Misappropriation of Assets" and "Abuse of Trust to Misappropriate Assets".


Regarding the recent significant economic criminal cases, the author believes that the prosecuting bodies have applied explanations and prosecuted the criminal charges convincingly, as exemplified by the criminal first-instance verdict number 607/2022/HS-ST pronounced on December 29, 2022, by the People's Court of Ho Chi Minh City related to the case at Alibaba Real Estate Joint Stock Company, for the crime of "Fraudulent Misappropriation of Assets". Other significant economic cases are still under investigation and trial, so there is no basis to assess whether the conviction in these cases is convincing or not.


However, some viewpoints suggest that in recent years, criminals infringing upon property rights have caused increasingly serious damage to society, so in cases where it cannot be clearly determined whether a criminal act is considered "Fraudulent Misappropriation of Assets" or "Abuse of Trust to Misappropriate Assets", prosecuting bodies tend to prove that the criminal act constitutes the crime of "Fraudulent Misappropriation of Assets".


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Disclaimer:

This article

  • reflects the author's subjective viewpoint on the main topic mentioned in this article, providing the best reference value at the time of publishing;

  • is not considered the viewpoint or opinion of any state agency in any case; and

  • does not constitute legal advice from Minh Thien Law and should not be applied to resolve any specific legal situation.

 

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