Illegal Receipt of Credits – Attorney-at-Law

Illegal receipt of credits. What can be done?

To answer this question, it is necessary to determine your status, i.e. whether you are a victim of a crime or on the contrary the one who is or potentially may further be held liable as a person suspected (alleged) of committing a crime.

• If you are a victim

1. Take steps to preserve the property, which has become the subject of swindling.
2. Refer to a lawyer who specializes in this category of cases.
3. Refer to law enforcement authorities with a statement of the crimes committed and a statement on the arrest of the property, which has become the subject of swindling.
4. Refer to the appropriate court with a lawsuit and request for interim measures.
5. Assist the court and law enforcement agencies.

• If you are the suspect, accused, defendant

Depending on the procedural status, namely the suspect, accused, defendant, you have a certain amount of rights.
Depending on the stage of criminal proceedings, you can implement some of your rights once you are in a certain status and, correspondingly, at a certain stage.
You need to know and remember that the right to defense from prosecution is constitutional and cannot be limited neither by any federal law nor by any other codified normative act, as well as put to subjection at the discretion of specific officials.

YOUR PROTECTION FROM PROSECUTION IN CASE OF ILLEGAL RECEIPT OF CREDITS WILL LOOK AS FOLLOWS:

Criminal procedure (more precisely, the pre-trial procedure) consists of the following stages:

1. Check of a crime report (pre-investigation probe), resulting in a decision to file a criminal case, or refusal to initiate criminal proceedings.
2. The preliminary investigation, which takes the form of a preliminary inquiry.

1. Pre-investigation probe into cases of illegal receipt of credits.
So, let us start with the first stage, check of crime report (pre-investigation probe), i.e. handling the notice of the crime, that may be against you or an indefinite number of persons, if not established who has stolen property or the right to it.
This stage features the verification of a crime report, i.e. the criminal case has not been filed, and the point is to be cleared whether there are elements of fraud and whether they are enough to file a criminal case.

If you are facing charges and pre-investigation probe has already started, it is to be carried out in the following timings: the law (clause 1 of Article 144 of the RF Criminal Procedure Code) requires the authorized persons to accept a report of any offense committed or planned, and the final decision should be taken within 3 days from the date of receipt of the information.

In exceptional cases, this period may be extended up to 10 days, for which the investigator (interrogating officer) is to submit a written request justifying the necessity and motivation of continuing the verification of the information.

The examination of a crime report may be extended up to 30 days to carry out documentary checks and audits. Such a probe ends with:
— Filing a criminal case,
— Refusal to open a criminal case, if the probe revealed no grounds for instituting criminal proceedings, or met the circumstances precluding the criminal action

At this stage, if your protection is concerned, it is necessary to be aware of your rights guaranteed by the Constitution of the Russian Federation.

Summarizing the above, it should be noted that in case of pre-investigation probe with you we recommend you to seek help from a professional lawyer who will provide you with professional assistance and can secure protection against possible illegal actions of law enforcement representatives.

2. Pre-trial proceedings (preliminary investigation) into cases of illegal receipt of credits.

The second stage, namely the preliminary investigation, deals with the following provisions of the Constitution of the Russian Federation:

Constitutional rights of the citizen
Rights provided by the criminal procedure law for the suspect and the accused, are listed in Article 46, 47 of the RF Criminal Procedure Code.

Rights of the suspect and the accused
The use and implementation of the above rights stipulated in the criminal procedure law are rendered individually for each criminal case and in respect of each of the suspect and the accused.
Depending on the results of investigation into the criminal case, a few settlements of the case may take place; they are all listed in the RF Criminal Procedure Code.

3. The court procedure in cases of illegal receipt of credits.
• The first instance
• The cassation instance
• The supervisory instance
• The European Court of Human Rights

To protect you from prosecution or judicial charges, it is necessary to address a number of practical tips, upon which the defense should be built. The defense itself for this category is not difficult, however, the criminal cases filed under Article 176 of the RF Criminal Code, are often re-classified subsequently to Article 159 Swindling of the RF Criminal Code. Therefore I suggest stopping at this issue, in order to try to prevent the undue re-classification of a case of ordinary credit into swindling.

KEY EVIDENCE IN CASES OF ILLEGAL RECEIPT OF CREDITS

The key evidence items for cases of this category are definitely written pieces of evidence (the credit agreement and the documents submitted by the borrower to get the credit). The above documents have the status of physical evidence in the criminal case, since they are withdrawn from a bank or another credit institution by investigating agencies on the basis of the order on seizure. The most important evidence is represented by the testimonies by the bank employees, as they have the status of witness statements in the criminal case, and so are those of employees of the borrowing company.

COMMENTARY ON ARTICLE 176 OF THE RF CRIMINAL CODE

The interests of creditors and lending practices of individual entrepreneurs and companies are considered to be an object of the considered crime.
The credit and favorable credit terms are viewed as a target of the crime.
The economy (economic theory and practice) regards a credit as the provision in debt of goods or money (cash credit) issued on terms of repayment within a certain period. The prerequisite of the credit is also the payment of interest for the use of it.
The procedure of granting a credit is governed by civil law. Article 819 of the RF Civil Code determines the contents of a credit agreement, under which the bank or other lending institution (lender) agrees to provide funds (credit) to the borrower in the amount and on the terms stipulated in the contract, and the borrower agrees to repay the amount of money and pay interest on top of it. Article 820 of the Civil Code establishes the obligatory written form of the credit agreement, breach of which makes it invalid.
The Civil Code provides some other types of credits than cash (commodity and business credits). The commodity credit (Article 822 of the Civil Code) is regarded as a party’s obligation arising from the contract to provide the other party with goods of certain generic characteristics (commodity credit contract). The business credit (Article 823 of the Civil Code) is a credit in the form of partial or full advance payment, deferral and installment payment for goods, works or services. However, the criminal legal theory (see B.V. Volzhenkin, Economic crimes, Saint Petersburg, 1999, page 32) and the jurisprudence understands the credit and credit agreement as the target of the crime (clause 1 Article 176 of the RF Criminal Code) to mean solely cash credit, in accordance with Article 819 of the Civil Code, issued to the borrower by a bank or another credit institution (which is in the form of cash only). 

6. The actus reus is characterized by 1) action, 2) method, 3) consequence, and 4) a causal relationship between action and consequence. 

7. In the quality of action as a constituent element of the actus reus, is considered the receipt by an individual businessman or organization manager of a credit or favorable credit terms. The latter means the agreement between the creditor and the borrower on a lower interest rate of the credit issued by the lender and returned by the borrower.

8. Illegal credit is a criminal offense if it has caused large-scale damage. According to the note to Article 169 of the RF Criminal Code it is a damage exceeding 250 thousand rubles.

Based on the designation of the given penal prohibition and the specifics of the object of the criminal offense under consideration, it must be concluded that the damage (large-scale damage) is inflicted to the creditor (a bank or another creditor). This damage may be expressed both in the form of real property losses, and in the form of lost profits associated with the non-return of the credit obtained by the borrower. As for specific types of large-scale damage to the lender, the criminal justice literature mentions the bankruptcy of the creditor company, disturbance of its normal operation, including the failure of the planned transactions, reduction of financial turnover, forced non-payment of taxes, failure to comply with other obligations assumed, the need to carry out forced redundancies and some other adverse consequences for the lender.

As already noted, the illegal receipt of credits is a criminal offense if it occurs in a certain way, namely by providing a bank or creditor with false information about the economic status or financial condition of an individual businessman or an organization. The information reflecting the economic status shall be understood in the criminal law theory and judicial practice to mean a set of internal and external data describing the management of economy of an enterprise, its production aspect. These include false information about the founders, directors, shareholders, key partners, relationships, co-operation with other firms; fictitious letters of guarantee, suretyships, pledged property (for which no foreclosure process can really be started) that does not correspond to the declared value and does not belong to the mortgagor; the feasibility study that identifies incorrectly the main uses of borrowed funds, specific business operations to be funded by the credit; forged contracts and other documents, incorrectly indicating the possibility of commercialization of the products by the borrower, his competitiveness, market position; corrupted warehouse and accounting data, etc.

Knowingly misleading data about the financial status may be in the form of information on the availability and characteristics of monetary funds. These are usually in the form of falsified accounting documents on registration in the tax office, showing the financial status better than it is in reality, falsified certificates of receivables and payables, credits and borrowings obtained from other banks, an extract from the transactional and current accounts and other documents.

Clause 2 of Article 176 envisages liability for illegally receiving single-purpose government credit, as well as for its use for the designation different from the intended one, if these acts have caused large-scale damage to individuals, companies or the State.
This corpus delicti differs from that of a crime under Clause 1 Article 176 of the RF Criminal Code, in the target of crime, actus reus and subject.

The target in this case is the single-purpose government credit, i.e. credit issued by the State (the Russian Federation) to territorial entities of the Russian Federation, industries of the economic complex, companies and individuals to implement certain economic programs, for technical assistance, support of individual regions (e.g., the northern regions), sectors of the economy (agriculture, coal industry and others), individual enterprises, new forms of economy management (for example, farmers, small and medium-sized businesses), for creating jobs, rehabilitation of refugees, individual housing construction, etc.

The receipt of a single-purpose government credit is considered illegal, if it has been received in violation of the established rules defining the substantive grounds for receipt of this credit with respect to the category of persons requesting it and their economic and social status (the element required for criminal liability under Clause 2 Article 176 of unlawfulness of violation of the procedural rules of the credit obtainment is not formed). 

Using single-purpose government credit for designation other than intended appears as the disposal of obtained funds for purposes contrary to those anticipated at the provision of the credit, i.e. mentioned in the decision to grant the single-purpose government credit.
Contrary to a crime under Clause 1 Article 176, the large-scale damage as a result of the illegal receipt of single-purpose government credit can happen not only for the lender, i.e. the state as such, but also for individuals and companies.
The value of large-scale damage is determined in accordance with the Note to Article 169 of the RF Criminal Code (over 250 thousand rubles).