A "circle trade" defrauded hundreds of millions of yuan: A certain Kai company was defrauded of 126 million yuan, and the procuratorate recovered the stolen goods and recovered nearly 50 million yuan in losses.

The order amount soared from 4.05 million yuan to 59 million yuan, and the purchaser who had been working with him stably for more than two years suddenly disappeared without a trace; the goods were repeatedly traded among the four parties, but after investigation, they were never produced——

A "circle trade" defrauded hundreds of millions of yuan

Our all-media reporter Wang Fubing Correspondent Su Shiyuan Zhao Haiyan

"Hello? Is this a Kai company? We are the Yixiu District Procuratorate. The coordination meeting for recovery of stolen goods and damages proposed when we visited your company last month is scheduled to be held at the end of September." On September 22, a phone call from the Yixiu District Procuratorate of Anqing City, Anhui Province once again rekindled the hope of a Kai company to continue recovering economic losses.

This company fell into a well-designed "circular trading" scam of "taking orders, taking tickets, but not taking goods" and lost hundreds of millions of yuan. The procuratorial organs went beyond the false appearance of the transaction to dig into the true nature and used penetrating examination to identify the purpose of illegal possession. In January this year, the Anqing Intermediate Court made a second-instance ruling on Zhang’s contract fraud case and upheld the first-instance verdict: Zhang was sentenced to 14 years in prison and fined 300,000 yuan. In order to cash in "justice on paper" into "return in the account", the procuratorial organs continue to pursue the stolen goods and recover losses. So far, they have recovered a total of nearly 50 million yuan in losses for enterprises. On July 22, this case was selected into the second batch of typical cases for the implementation of the Private Economy Promotion Law jointly issued by the National Development and Reform Commission and the Supreme People's Procuratorate.

puzzle

Unrecoverable funds and “goods on paper”

"Our company has a long-term cooperation with a certain company. Now the payment of hundreds of millions of yuan is in arrears and cannot be recovered, and the partner cannot be contacted..." In March 2024, the public security agency received a report of information that was like a lead, leading to a contract fraud case that lasted more than two years.

Back in June 2021, Zhang, as the deputy general manager and financial manager of a certain company, opened the door of the headquarters of a certain company with the introduction of an intermediary. He held the latest business licenses of a certain company and a certain di company, and presented a very tempting cooperation plan: a certain promising company plans to purchase more than 3 million yuan of circuit boards, but due to the high cost of circuit board assembly, it needs to find a venture capital company to advance the capital for the assembly and production company (i.e., the certain di company), and promises to pay 10% of the sales profit to the party that advances the money after the completion of the transaction.

After risk assessment, a Kai company determined that the business was profitable and the risks were controllable. It happily entered the business and formally signed a contract with a promise company to become a venture capital investor. In the following two and a half years, a certain Nuo company placed dozens of orders with a certain Kai company, and the order amount soared from 4.05 million yuan to 59 million yuan. On the surface, the trade between the two parties was booming and prosperous.

The turning point of things happened in December 2023. During a financial review and calculation of total business profits, a Kai company accidentally discovered that no logistics and transportation information could be found for the goods sent by a Di company to a Nuo company. In the face of corporate inquiries, the company has always been unable to provide any delivery certificates. After realizing that there may be huge risks hidden behind it, a certain Kai company urgently stopped its business and tried to recover the remaining payment. However, at this time, Zhang, the core figure in the transaction, had completely lost contact. In desperation, a certain company decided to call the police for help.

After investigation, as of the incident, a Kai company had paid a total of more than 600 million yuan to a certain company, a certain company had paid back more than 471 million yuan, and the remaining 202 million yuan had not yet been settled.

Break the situation

Restoring the truth of "circle trade"

In March 2024, the Yixiu Branch of the Anqing Municipal Public Security Bureau opened the case for investigation. In view of the serious and complex nature of the case and the huge amount of money involved, the Yixiu District Procuratorate immediately formed a case handling team and intervened in accordance with the law. Faced with a mountain of account books and case-related materials, the primary problem facing the case-handling team is: did this batch of goods without any logistics information really exist?

After repeatedly comparing the transcripts of all the persons involved in the case from the three companies, the case handling team discovered an absurd "closed loop": According to Di company, the goods were provided by Zhang's actual control company and sent directly to a certain company; in the contract of a certain Kai company, the goods were produced by a certain Di company and directly sent to a certain Nuo company; and in the cooperation with a certain Nuo company, the goods were entrusted by a certain Kai company to be produced by a certain Di company and sent directly to Zhang. Each party in the chain is not actually responsible for the production, delivery, or receipt of the goods, and no one has ever seen the actual goods from beginning to end. This means that there is a possibility: the circuit board involved has never been produced at all.

In order to further verify the conjecture, the case handling team tracked the flow of funds one by one and verified the actual control relationship of each company involved in the case. It was finally confirmed that the identity of the so-called deputy general manager and financial manager of a certain company was fabricated by Zhang, and both buyers and sellers of the trade were companies actually controlled by Zhang. The goods had never been produced. This false "circle trade" was carefully planned by Zhang to defraud a certain company of funds.

It turned out that as early as the beginning of 2021, Zhang had asked an intermediary to contact a Kai company, hoping to introduce advance funds to expand production, but was rejected because of his lack of corporate qualifications. After the financing failed, he came up with the idea of ​​​​"backdoor setup": Since his company is not qualified enough, why not just find two companies to cover it? Therefore, he contacted a certain company that he had invested in, saying that he had a circuit board purchase business that had been negotiated, and promised that for every circuit board transaction that was completed, he could get a 3 yuan benefit fee for each circuit board by signing the contract and posting the transaction. He also persuaded Hong, the boss of a certain company that was in urgent need of performance, to act as a "middleman" for this so-called circuit board purchase business.

After some planning, Zhang obtained the business licenses of a certain company and a certain company. Later, he put on the "vest" of "Deputy General Manager and Financial Manager of a certain company" and successfully won the advance cooperation with a certain company. The capital flow path of the scam begins: a Kai company advances funds to a certain Di company, and the Di company deducts the handling fee and transfers it to Zhang's actual control company; 90 days later, Zhang's actual control company will pay a 10% increase in price to a certain company, and the certain company will return the money to a certain Kai company. And these 90 days are the window period for Zhang to use other people's funds to "empty money". In order to maintain the "capital loop train", all "profits" and "introduction fees" on this trade agreement are borne by Zhang.

"In order to create the illusion of the flow of goods, Zhang instructed a certain company to forge a false invoice. After he signed and confirmed receipt of the goods, he then sent the documents through an online group to deceive a certain company. The key information such as the subject matter of the goods and the transaction price in the sales contract involved in the case were all controlled and arranged by Zhang. They were not negotiated between the two parties based on real market demand. This fully complies with the objective elements of the crime of contract fraud," said Zhang Qiang, the prosecutor handling the case.

foregone conclusion

Penetrating review to target illegal possession

In July 2024, the case was transferred to the Yixiu District Procuratorate of Anqing City for review and prosecution. Written contracts with complete forms and complete elements have built up a very confusing legal shell. The case first faces a qualitative problem: Is this an ordinary civil contract dispute or a criminal contract fraud crime?

"The core of whether the crime of contract fraud can be determined is to examine whether the perpetrator has the purpose of illegal possession. Zhang made up a fictitious closed-loop trade project and deliberately created the illusion of prosperous transactions, which is a typical fraud method. But to consolidate the basis of the accusation, a complete and strict evidence chain must be built around the subjective intention of illegally possessing funds." In order to clear up the fog of false contracts and get to the essence behind the trade, the case handling team established a "penetrating review" case handling idea, jumping out of paper contracts and digging into the true whereabouts of the funds.

By combing through a large amount of bank statements, the case investigation team discovered that after Zhang defrauded the funds, he did not invest them in the normal production and operation of the company. Instead, he spent huge amounts of money on purchasing land, building factories that were far beyond his own operating capacity, repaying personal debts, stock trading, purchasing real estate and expensive luxury goods. A large amount of money was also used to pay "profits" and "introduction fees" that did not produce actual value in the transaction chain.

In order to further clarify the facts, the procuratorate returned the case to the public security organs for supplementary investigation twice, and retrieved the equity agreement, a full set of bank statements, and financial account books of related companies, focusing on verifying the proportion of funds squandered and the true business volume of the companies involved. At the same time, a third-party forensic appraisal agency was entrusted to conduct a special audit of all capital flows involved in the case to completely restore the entire process of obtaining advance funds.

Evidence shows that the business scale of the enterprise actually controlled by Zhang is extremely small and has been in a state of loss for a long time. It has no economic ability to repay principal and interest on schedule. After a capital gap of 7 million yuan appeared at the end of July 2023, instead of stopping the loss in time, he added three consecutive large orders of more than 20 million yuan in just one month in an attempt to "repay the old with the new," resulting in a growing capital hole. The audit results showed that a Kai company lost a total of more than 126 million yuan, and Zhang's actual control company actually withheld more than 102 million yuan.

"The actor knew that he had no ability to repay, but still continued to enlarge the scale of the debt. This is an important reference for determining the 'purpose of illegal possession' in judicial practice." Zhang Qiang explained.

In December 2024, the Yixiu District Procuratorate prosecuted Zhang for suspected contract fraud in accordance with the law. In February 2025, the court held a public hearing on the case. During the trial, the defender argued that the transaction involved in the case was essentially a corporate financing loan, and all parties in the chain knew that it was called trade but was actually a loan. The public prosecutor strongly refuted it in court: The existing evidence proves that the management of a Kai company made collective research and judgment, and the financial department completed risk calculations and confirmed that the project was profitable and the risks were controllable before signing the contract and disbursing the payment. The company's advance fund behavior was completely based on the wrong trust in Zhang's fictitious circuit board purchase and sales business.

The court ultimately adopted all the prosecution’s charging opinions and sentencing recommendations. In August 2025, Zhang was sentenced to 14 years in prison and fined 300,000 yuan for contract fraud. The defendant was dissatisfied and appealed. In January this year, the second-instance court ruled to reject the appeal and uphold the original verdict.

ending

Concentrate efforts to recover stolen goods and protect corporate rights and interests

"The economic loss of 126 million yuan is enough for any private enterprise to determine the survival and development of the enterprise." Zhang Qiang said that during the handling of the case, the procuratorial organs insisted on punishing crimes and recovering stolen goods and recovering losses simultaneously. Asset inventory, ownership screening, and legal interpretation were carried out throughout the case handling, and they made every effort to recover losses for the injured enterprises.

Defining the ownership of the property involved in the case is far more complicated than expected. A large amount of funds defrauded by Zhang were circulated through multiple levels of "bridging" company accounts, with scattered destinations and confusing ownership; part of the stolen money was used to purchase real estate in the name of persons not involved in the case, and the property registration rights holder was inconsistent with the actual investor.

In order to clarify the true ownership of the property involved in the case, the case handling team, together with the public security organs, started from the bank accounts of Zhang’s actual controlled enterprise and its affiliated companies, traced the flow of large amounts of funds item by item, and carefully screened the property ownership based on evidence such as equity agreements, transfer records, and house purchase contracts. Real estate and vehicles purchased with stolen money, as well as bank deposits that have been frozen in place, will be seized, detained, and frozen as soon as possible in accordance with the law, so that all stolen money and stolen goods should be controlled, leaving no loopholes for tracing stolen goods.

For the intermediate enterprises and intermediaries who have received various "introduction fees" and "commissions" in this transaction chain, the case handling team went to relevant entities one by one to explain the law and clearly informed them that the so-called "introduction fees" and "commissions" obtained through false trade business are essentially illegal gains and are not protected by law; at the same time, they explained the legal consequences of refusing to refund the money involved in the case. After patient persuasion, the relevant persons and companies involved in the case took the initiative to return all illegal gains.

Thanks to the joint efforts of the public prosecutor and prosecutors, the business intermediary refunded more than 20.44 million yuan, the company involved refunded more than 3.33 million yuan, seized Zhang's company's cash of more than 1.95 million yuan, seized three properties purchased with illegal gains worth about 12 million yuan, and seized vehicles and other property worth about 10 million yuan. In the end, a total of nearly 50 million yuan was recovered and lost.

The prosecution's efforts to recover stolen goods and recover losses have not stopped here. After the second-instance judgment came into effect, the case-handling team visited a certain Kai company many times and met with company leaders to jointly study and determine feasible ways to recover the stolen goods and restore losses. This "endurance race" to recover stolen goods and recover losses is still going on.