Zhao is suspected of a bill fraud case.

Keywords: Bill fraud / Bounced checks / Malicious debt collection / Case classification / Not guilty defense

Handling Attorney: Yang Xingquan

Basic Facts of the Case:

On September 1, 2000, Company A, operated by the defendant Zhao, initiated a yacht club project. Company A contracted the construction of the yacht club project to Company B, and the two parties signed an engineering agreement. On November 27, 2001, Wang, the project manager of the Fourth Branch of Company B, which had undertaken the project, conducted the final settlement for the project. Company A was obligated to pay Company B RMB 7.5 million as the project payment. On February 11, 2002, in order to pay the contractor’s project payment, the defendant Zhao issued Wang a time draft check with a face value of RMB 2 million for remote transfer. The two parties agreed that Wang could not deposit the check into a bank for transfer without first receiving notice from Zhao. Wang was instructed to wait until at least March 15, 2002; otherwise, Zhao would be liable for a daily penalty of 10%.

Company A replaced this transfer check for Wang eleven times in succession. The date of the last check issued was July 31, 2002, while its due date was October 9, 2002. Afterwards, Wang approached a third party, Huang, and asked Huang to help him collect the debt. Together, Wang and Huang forged documents showing that a check for 2 million yuan had been exchanged for 2 million yuan in cash. Wang promised Huang a 15% commission—300,000 yuan—once the 2 million yuan was recovered.

On October 15, 2002, Huang went to a bank with the transfer check last issued by the defendant Zhao to Wang, but the bank refused to accept it for encashment. Subsequently, Huang filed a report with a certain municipal public security bureau. After the bureau initiated an investigation, it took coercive measures against Zhao, compelling him to hand over 2 million yuan to the bureau. The following day, the bureau delivered the 2 million yuan to Huang. However, Huang then developed malicious intent to keep the money for himself. As a result, Wang repeatedly requested the money from Huang without success—until Huang, driven by greed and malice, murdered both Wang and his driver (Huang was later convicted of murder and sentenced to death in a separate case).

The prosecution alleges that the defendant, Zhao, as the legal representative of Company A, defrauded a third party, Huang, of 2 million RMB by issuing worthless checks. The defendant’s lawyer argues that the prosecution’s allegations lack both factual and legal basis. This case, according to the defense, is one in which Wang and Huang colluded to fabricate facts and exploited the public security authorities in order to achieve their goal of collecting a debt.

Ultimately, the court found that the prosecution’s allegation that the defendant Zhao had fraudulently obtained 2 million RMB from Huang by issuing worthless checks was not clearly established and lacked sufficient evidence. Therefore, the charge against the defendant Zhao could not be substantiated, and the defendant Zhao was found not guilty.

Case Highlights:

After taking over the case, the lawyer conducted a detailed analysis of the evidence and found that the case should be approached from the following two aspects:

I. Whether Zhao committed fraud against Huang by issuing worthless checks, thereby defrauding him of 2 million yuan.

There is no factual basis to suggest that Zhao defrauded Huang of 2 million yuan by issuing a worthless check. The true facts are as follows: After Wang repeatedly urged Zhao for payment of the project funds following Zhao’s issuance of a remote, fixed-term transfer check for him, Zhao finally issued Wang a check dated July 31, 2002, with the actual payment date set for October 9, 2002. Subsequently, Wang approached Huang and asked Huang to help collect the debt on his behalf. Together, they fabricated procedures to exchange the 2-million-yuan check for 2 million yuan in cash, and then used this fabricated scheme to file a false criminal complaint with the public security authorities, thereby creating a false impression of a criminal case.

II. Can Zhao’s act of issuing a remote, time-limited check to Wang as payment security constitute the crime of negotiable instrument fraud?

In this case, bill fraud should be understood as the act of issuing worthless checks with the intent to illegally obtain property from others. However, in Zhao’s case, his purpose in issuing these worthless checks was not to illegally appropriate others’ property but rather to delay payment of the construction project’s dues. Zhao’s conduct constitutes a violation of bill-related regulations, but does not amount to the crime of bill fraud. Both the factual findings and the legal characterization made by the prosecution are seriously flawed. Therefore, this case should be classified as a civil dispute over construction payments rather than a criminal case involving bill fraud.

Typical significance:

At the heart of criminal defense lies, inevitably, a firm grounding in facts and evidence. The successful defense in this case hinged primarily on two key points:

First, the methods and approaches for reconstructing the facts of the case.

Because this case involves a third party, Mr. Huang, the facts at issue are more complex than those in typical criminal cases, making it quite challenging to objectively and accurately reconstruct the truth of the matter. For this case, Mr. Huang represents the key breakthrough point. The prosecution’s charges are based entirely on Mr. Huang’s testimony; therefore, the defense counsel must present evidence and conduct logical analysis to demonstrate the falsity of Mr. Huang’s testimony and thereby restore the true facts of the case. First, the lawyer needs to carefully review the case files, identifying contradictions and inconsistencies in Mr. Huang’s statements and refuting the credibility of his testimony. Second, the lawyer must present extensive evidence to reconstruct the objective circumstances of the case. Finally, through logical analysis, the lawyer will determine the facts of the case and conclude that this is a fabricated case orchestrated by Wang and Huang, who conspired together to fabricate false claims and exploited the public security authorities to achieve their debt-collection goals.

Second, objectively and accurately determine the nature of the case.

Zhao’s issuance of the check served as the trigger for this case. After dismissing the credibility of Huang’s testimony, a qualitative analysis of Zhao’s act of issuing the check to Wang became the key to resolving the case. The defense attorney conducted a thorough analysis and objective argumentation of Zhao’s check-issuing behavior from both subjective and objective perspectives. The conclusion reached was that Zhao’s conduct did not meet the constitutive elements of the crime of bill fraud under China’s Criminal Law; therefore, Zhao’s actions could only be classified as an illegal act involving negotiable instruments.

In criminal cases, reconstructing the facts and conducting qualitative analysis are crucial for lawyers to mount an effective defense. Only by firmly grasping these two key aspects can lawyers achieve a successful defense outcome. The successful defense in this case also provides valuable judicial practice references for similar cases, while simultaneously serving as a wake-up call: the socialist market economy is a rule-of-law economy, and all market entities—whether engaged in production and operations or financial settlements—must act in strict compliance with the law, maintain integrity, and uphold trustworthiness.