Keywords: Embezzlement; Theft; Not Guilty Defense; Withdrawal of Prosecution

Counseling Attorney: Chen Lin, Li Qilun

Basic Facts of the Case:

In January 2012, Bao leased 50 mu of land in a certain village and invested over 3 million yuan to establish the Bo Breeding Farm, registering it as a sole proprietorship enterprise with Feng—a former wife of Bao—as the investor. The prosecution alleged that in March 2016, without Bao’s consent, Cao took advantage of his position in the construction and management of the Bo Breeding Farm to arbitrarily dismantle an already-built steel-structure greenhouse on the premises, using the dismantled structure for the construction of a cattle and sheep farm in which Cao held a stake. According to the appraisal conducted by the Price Identification Center, the value of this property amounted to 70,126 yuan, causing a total property loss of 260,000 yuan to the enterprise.

The primary court found that although Bo’s farm was registered with the industrial and commercial authorities as a sole proprietorship, its registration and deregistration were not directly related to the construction and operation of Bo’s farm. Moreover, Bao, Zhang, and Cao all claimed that the three had jointly established Bo’s farm and signed a partnership agreement specifying their respective capital contributions, methods of contribution, and rights and obligations of the partners. Based on this, the court determined that the nature of the farm should be classified as a personal partnership rather than a sole proprietorship. Consequently, Cao did not possess the requisite subject status for the crime of embezzlement. During the first-instance trial, the prosecution adjusted the charge against Cao, bringing criminal charges against him for theft instead. The prosecutor presented evidence including Cao’s own statements, testimonies from the victims Bao and Zhang, testimony from witnesses who had participated in discussions about the demolition, and testimony from witnesses present at the demolition site. Cao argued that the demolition of the steel-structure greenhouse had been approved by Bao and Zhang, and that he himself had never visited the demolition site and thus had not committed any criminal act. Subsequently, the primary court ruled that Cao was guilty of theft, sentencing him to three years’ imprisonment and imposing a fine of 20,000 yuan, and ordering the recovery of his illegal gains amounting to 70,126 yuan. Dissatisfied with the original verdict, Cao filed an appeal. The second-instance court held that the facts as established in the original judgment were unclear and accordingly reversed the original judgment, sending the case back for retrial.

Case Highlights: The court of first instance found Cao guilty of theft and sentenced him to three years’ imprisonment. In the second trial, the original verdict was overturned and the case was remanded for a new trial. At this stage, our firm’s lawyers accepted the mandate and mounted a not-guilty defense, ultimately leading the procuratorate to withdraw the indictment.

Typical significance:

In mounting a not guilty defense for the crime of embezzlement of official duties, we begin by examining the nature of Bo’s farm and argue that, based on the substantive facts, it should be classified as a personal partnership. A personal partnership does not fall within the category of corporations, enterprises, or other entities. Currently, neither China’s relevant laws nor judicial interpretations define personal partnerships as “other entities” under criminal law. In accordance with the principle of legality in criminal law, personal partnerships should not be interpreted by analogy as “other entities”; otherwise, such an interpretation would violate the principle of legality in criminal law. Since a personal partnership lacks independent property and bears unlimited joint and several liability to external parties, it fails to meet the requirement that an entity must have independent capacity to assume external liabilities. Consequently, it cannot be considered an organized entity, and therefore a personal partnership cannot serve as the victimized entity in a case of embezzlement of official duties. As a result, partner Cao naturally cannot be deemed the perpetrator of the crime of embezzlement of official duties. Hence, in this case, member Cao of the personal partnership should not be found guilty of embezzlement of official duties.

In mounting a not guilty defense for theft, starting from the evidence, there is no direct evidence to prove key details of the case—such as the exact time when the dismantling was carried out, who was present at the scene and carried out the dismantling, how many chicken coops were dismantled, and whether Cao was involved. The witness testimonies on record lack consistency and contain contradictions among themselves, lacking credibility and failing to form a complete chain of evidence. Consequently, it cannot be established that Cao had the subjective intent to commit theft nor that he objectively engaged in any act of theft. Furthermore, an analysis of this case from the perspective of property rights reveals that the items involved are jointly owned by the partnership, and all partners enjoy equal ownership rights. Therefore, Cao’s possession of these items is lawful. Even if Cao did indeed dismantle and remove the steel-structure greenhouse, such action constitutes a lawful transfer of his share of the jointly-owned property. This conduct is not unlawful, does not infringe upon any legally protected interest, and thus certainly does not constitute a crime.

This case should be classified as a civil dispute arising from the ambiguity regarding the agreed-upon shares among the parties to the partnership agreement. In accordance with the principle of leniency in criminal law, the defendant should not be prosecuted through criminal means. The Supreme People's Court and the Supreme People's Procuratorate have repeatedly issued guiding opinions, firmly preventing and correcting the practice of using administrative or criminal measures to interfere with economic disputes. Therefore, this case is a civil dispute and should be handled according to the provisions governing partnership relationships; Cao should not be held criminally liable under the charge of theft.