Comments made by lawyer Vladislav Prokhorov to an article titled “Law versus Benders of the XXI century”

17 April 2012
Citizens, businessmen and banks will be more severely penalized for fraud. The RF Supreme Court decided to extend criminal liability for various types of fraud. The current statutory provision does not meet modern requirements and is not always helpful for those combating successors of the Great Schemer.

Fraud is defined as stealing or acquiring other person’s title to property through deceit or abuse of confidence. This provision of the RF Criminal code (Article 159) was borrowed from the Soviet legislation, making it difficult to apply it in the context of modern market economy. Judicial officers of the RF Supreme Court stated that “Insurance branch and investment activity grow rapidly, information technologies penetrate our reality (including financial sector) at an increasing rate”. A bill recently brought in the State Duma, introduces the new set of six specific types of fraud, unknown to protagonist of the Ilf and Petrov’s novel.

No roof over one's head

First of all, judges are concerned with rampant real estate fraud: last year, over a thousand people were found guilty of crimes relating to residential property market. This being said, sanctions depend first of all on the real price of the fraudulently acquired apartment. To prevent socially dangerous activities, they propose to qualify any fraudulent transactions (resulting in the citizen's being deprived of title to an apartment) as grave offences.

Aleksandr Ginovker, Head of the specialized commission of the St. Petersburg Association of Realtors, also believes that fraud in the residential property market is a very pressing problem, transactions involving “problem flats” make up 5-15% of all the real estate sales: “However, I’d like to view the issue from a different angle - the state should guarantee the rights of good faith purchasers”.

Veniamin Yakovlev, counselor to the President, and the ex-chairman of the Supreme Arbitration Court “gave ear” to this advice of the St-Petersburg realtors: a draft law developed under his guidance and already introduced in the State Duma stipulates that any real estate transactions shall be certified by notaries. But it still remains unclear, whether this law will protect good faith owners and purchasers of apartments, because the same draft legislation proposes to completely release practicing notaries of any responsibility (for instance, if the flat was transferred to the swindler against quality forged documents). Such events have already happened: notary Vladimir Kovalev has certified the sale of an apartment by an owner who has been dead for over three months... Over the last year, the St. Petersburg courts passed more that 40 judgments concerning illegal acts committed by notaries, but none of them was held responsible to victims.

Notaries will be brought under control

And this is Lenya Golubkov

The RF Supreme Court sees an equal threat in investment fraud (defined as raising funds through deception as well as through abuse of investor confidence). This term will cover selling stocks and shares with promise to pay big dividends or interest, tweedling purchasers of apartments into joining a housing cooperative, and the usual pyramid schemes, etc. Judges stated that such acts involve high risks: “They damaged many people, and tremendous financial losses are incurred by citizens in total”.

Fraudulent borrowers should be classified as a separate category. In 2011, over 2500 people were found guilty of providing banks with knowingly false or inaccurate information. Fraudulent acts involving payment cards are deemed as a separate category of crime. Using another person's plastic card (signing a slip or a check for a legal owner) may lead to imprisonment for up to two years. Any people simulating an insurable event or counterfeiting documents so as to increase benefits will be sued for insurance fraud. A separate article will be provided for hackers involved in stealing virtual assets by interfering with data telecommunications network, modifying computer data, etc.

Should the proposed amendments be adopted, even retired persons and other disadvantaged groups can go to jail: any receipt of allowances, compensations, subsidies and other payments based on knowingly false or inaccurate information, or suppression of facts which may result in discontinuance of such payments, shall be deemed as a crime. According to figures from the highest court, there is an annual average of four thousand such cases recorded.
This being said, the upper limit for petty theft charges remains the same - any fraud worth up to one thousand rubles shall be deemed as an administrative offense and penalized through fivefold restitution for stolen property or fifteen days of arrest.

The Code should be respected!

In the meantime time judges recognize that many "businessmen" manage to escape punishment, since criminal proceedings involving allegations of fraud (committed under the guise of a civil transaction) cannot be initiated unless there is an evidenced intent of theft. The suggested amendments do not provide a solution to this problem.

Lawyers interviewed by BaltInfo were ambiguous when estimating these developments. According to Vladislav Prokhorov of the law firm S&K Vertikal, the draft law was meant to help executors of law (investigators, prosecutors and judges): “It is supposed that including six new articles into elements of a crime will simplify the procedure used to prove malice, however, it is difficult to predict how it will look like in reality”. Sergei Tokarev, Senior Associate of Pen&Paper, takes a different view of this matter: “It just means adding more details and simulating vigorous activity, which will increase flow of documents in the law enforcement agencies and make qualification more difficult”.

Lawyers also believe the legislation in force makes it possible to prosecute individuals for any offence stipulated in the project, as it gives free rein to investigation agencies and judges evaluating the intent. Judicial explanations issued by the RF Supreme Court five years ago determine the criminal character of any receipt of money by deception, including, for example, selling goods which do not correspond with their description, etc. Actually, initiating criminal proceedings against credit or data swindlers is a big challenge – last year, only 447 fraud cases were tried in the St. Petersburg courts.

Baltiiskoye Informatsionnoye Agentstvo

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