Attorney Shao Shiwei | Real-World Case of the Crime of Illegal Business Operations: Successful Defense Resulting in a Not-Guilty Verdict, Republished by Shanghai Legal Daily

Late one night, I suddenly received a call from a middle-aged man.

"Hello, Attorney Shao. My friend, XX, provided me with your contact information. Today, I was taken by the police to the local police station for questioning throughout the day and have just been released on bail pending trial. I would like to consult you: Is my case very serious? Will I face imprisonment?"

I still remember that phone call. His voice sounded heavily restrained, tinged with panic and helplessness, as he attempted to organize his thoughts while striving to communicate with me about the case itself. I immediately set aside my current work and said, "Certainly. Please first tell me the specific circumstances of the case."

It turned out that he had formerly been a senior executive at a foreign-invested enterprise. In his forties, he had maintained a hobby of collecting audio-visual products for many years. Approximately six months ago, due to financial strain caused by layoffs at his company, he began driving for Didi on a part-time basis to make ends meet, while also listing some of his collected audio-visual products on second-hand platforms for sale to supplement his household income. As the response was favorable, in the past two months he purchased a batch of records from overseas and listed them for sale on an e-commerce platform.

However, on the morning of the day he contacted me, before he could go out to drive, police suddenly arrived at his residence and took him into custody. He was then handcuffed and taken to a certain police station in Shanghai, where he underwent interrogation for ten hours, only being released late at night.

He only learned from the handling officers that the matter arose because a batch of audio-visual products he had recently procured from overseas was detected by Customs upon entry. Subsequently, a special task force composed of multiple authorities, including public security, customs, market regulation, press and publication, and cultural administration, initiated a criminal investigation against him for the crime of illegal business operations.

He was perplexed: He was merely selling collectibles online; how could this possibly constitute a criminal offense?

What he feared even more was: If it indeed constituted the crime of illegal business operations, how severe is this charge? Would he be sentenced to criminal punishment? How many years of imprisonment might he face?

2、Why was it classified as "illegal business operations"?

According to the client's description, the audio-visual products he collected and sold mostly featured classic tracks, primarily instrumental light music, and even lacked lyrics. He believed they were unrelated to any prohibited content. In his view, he was merely engaging in an activity extremely common on open platforms—trading personal collections on e-commerce platforms.

He had observed sales records for numerous similar products on multiple mainstream e-commerce platforms and had even purchased such items himself as a consumer. Consequently, he could not comprehend why what appeared to be “normal business transactions” conducted by so many others resulted in his being treated as a criminal suspect accused of the crime of illegal business operations.

In fact, this involves a compliance requirement little known to the general public—the Import License for Publication Operations.

Under current legal provisions, any sale within the territory of China of publications (including audio-visual products) purchased from overseas, whether conducted online or offline, must obtain the requisite business license in accordance with the law.

However, the threshold for obtaining such a license is extremely high. During my representation of cases, I visited the relevant regulatory authorities and received a clear response: currently, only four or five large state-owned publishing entities in the Shanghai area possess this license, and individuals and general merchants are ineligible to apply. This implies that, in practice, this qualification presents high entry barriers and de facto monopolistic characteristics.

A more practical issue is that a large number of ordinary merchants are completely unaware of this compliance threshold. If one engages in unauthorized sales without obtaining the business license, even if there is no subjective malice and the intent is merely to supplement household income, once the sales amount meets the threshold for criminal case filing, one may still be investigated and prosecuted for the crime of illegal business operations.

In other words, the key determinant of whether a crime has been committed lies not in whether one "subjectively intended to break the law," but in whether one objectively engaged in unlicensed business operations and met the threshold for criminal liability. This is the "legal baseline" emphasized by criminal law.

It is worth noting that a large number of similar products remain available for sale on major platforms. However, the fact that they have "not yet been investigated and penalized" does not mean that such conduct is lawful.

For the party involved in this case, he was simply "the one coincidentally selected for investigation and penalty."

(As of now, a large number of similar products can still be found for sale on multiple e-commerce platforms.)

3. Given that the sales volume far exceeds the threshold for case filing, is conviction for the crime of illegal business operations unavoidable?

According to the Criminal Law and relevant judicial interpretations, if an individual engages in unlicensed sales of publications, once the sales amount reaches RMB 150,000, or the illegal gains exceed RMB 50,000, it constitutes "circumstances of particular seriousness" under the crime of illegal business operations, which typically warrants a fixed-term imprisonment of five years or more.

At the time of the incident, the party had not precisely calculated the sales amount, but he clearly informed me that the sales volume over a six-month period had far exceeded RMB 150,000. Although the profit was not high, amounting to only slightly over RMB 50,000, this was sufficient to meet the monetary threshold for criminal liability.

This constituted an unacceptable blow to him.

He is a middle-aged professional with many years of experience in foreign enterprises, having studied abroad, enjoying a happy family life, and holding a stable job. In his view, he was merely "selling some collectibles"; how could he overnight become someone "suspected of committing a crime"? Moreover, he faced the risk of actual imprisonment of five years or more.

Although he has been released on bail pending trial and his life has ostensibly returned to normal, during that period he was awakened by nightmares every night and appeared extremely haggard. During my calls and meetings with him, I could almost invariably sense his intense inner turmoil and persistent anxiety.

This emotional state also affected me.

On the one hand, if any ordinary person were suddenly embroiled in a situation involving such a severe criminal law impact, it would be difficult to accept. This is truly not a typical type of crime involving "knowingly violating the law" or "taking desperate risks."

Legal prohibitions concerning categories such as tobacco and alcohol, controlled substances, firearms and ammunition, and wildlife are well known to most people. However, the licensing thresholds for the sale of publications are completely unrecognized by many entrepreneurs engaged in cross-border business and freelancers.

On the other hand, I searched for multiple similar precedents and gradually realized that once unlicensed sales reach the threshold for case filing, there is virtually no dispute in judicial practice regarding the constitution of a crime. This made me realize that the scope for defense might be extremely limited, imposing considerable professional pressure on me. For example, the following precedents:

The reason this case received lenient treatment was that the defendant exhibited typical mitigating circumstances, such as voluntary surrender, pleading guilty and accepting punishment, and actively making restitution. Based on this, the court applied a "reduced sentencing tier," ultimately imposing a suspended sentence.

However, my client's situation was even more severe:

• The sales amount exceeded RMB 700,000, more than twice that of the aforementioned case;

• The public security authorities arrested him at his residence, meaning there was no voluntary surrender, and the circumstance of voluntary surrender did not apply;

• Although he cooperated with the interrogations, his initial statement was given in haste. As this was his first time undergoing a criminal investigation, he was under significant psychological pressure, creating a risk that certain parts of his statement may have been influenced by misleading questioning.

In reality, his "illegal gains" amounted to slightly over RMB 50,000, which can by no means be characterized as substantial profiteering.

He is not a professional "reseller"; his actions were merely an attempt to make a living.

Should a single gap in legal awareness necessarily result in a prison sentence of more than five years?

This is not a question he alone keeps asking—

As his defense counsel, I have also been continually questioning myself.

4、Pleading Not Guilty versus Pleading Guilty and Accepting Punishment: A Difficult Choice in Defense Strategy

As lawyers, especially when handling criminal cases, we are inevitably influenced by the emotions of our clients and their families. However, the ability to quickly detach from emotional involvement and maintain rationality is an essential professional competency for lawyers. If a lawyer becomes entangled in an emotional vortex alongside the client or their family, thereby losing the capacity for rational thought, who will provide legal advice to the client during each investigative interrogation conducted by the authorities? In certain scenarios, adopting an adversarial stance against judicial authorities is a necessary litigation strategy to safeguard the client's legal rights. In such circumstances, lawyers must maintain clear and rational thinking to carefully weigh the options and make the most advantageous decisions for their clients.

Therefore, after several days of distress, I detached myself from these emotions. I began to reflect on the case itself and outlined the key issues as follows:

• Regarding the current operating volume as statistically determined by the judicial authorities,Is the amount reasonable?What is the specific method of calculation?

• If the amount determined by the judicial authorities is higher than the amount calculated by our side, how can we persuade the judicial authorities to adopt our calculation method?

• The business turnover includes costs advanced by the party for the buyer,such as postage and packaging,which we propose to deduct. Can this claim be supported?

• Xianyu is a second-hand platform. Therefore, regarding the resale of one’s own records on such a platform, we argue that the portion involving the party’ssale of personal collectiblesshould not be included in the total amount of illegal business operations. Can this argument be supported?

• Although the party reinvested part of the profits into purchasing more records,and considers this point favorableto argue that their actual profit was lower, could this be characterized by the judicial authorities asexpansion of productionthereby adversely affecting our position?

• On the Taobao platform, the client operated under the name of a company. Is it possible to argue forcorporate crime？

• The case was initiated because vinyl records purchased overseas by the client were seized by customs. In addition to the current charge of illegal business operations, does this involvethe crime of smuggling ordinary goods and articlesIf constituted, should the heavier offense be selected for punishment, or should cumulative penalties for multiple offenses apply?

(Similar case news source: Official Website of Beijing Customs)

……

The above defense points are key considerations premised on the assumption that the judicial authorities find the client guilty. However, in this case, because the client’s sales volume far exceeds the threshold for filing a case for offenses punishable by more than five years, even if corresponding deductions are made,it remains extremely difficult to reduce the amount involved to fall within the range of offenses punishable by less than five years. Therefore, I must consider：

if the final sentence is more than five years, the client no longer has the mitigating circumstance of voluntary surrender to reduce the sentencing tier. Currently, is it possible to provide leads on illegal or criminal activities toseek recognition for meritorious service？

In fact, after the case was initiated, the client remained perplexed: why were so many online store merchants selling vinyl records left untouched, while only he was investigated? Accordingly, I accompanied the client to a local police station (not the one handling this case) to report this situation and communicated with the officers. However, surprisingly, the officers responded: “Cases of this type are too rare; we have never handled such cases and lack relevant experience. Therefore, we will not accept the leads provided by your side.”。

In practice, it is actually very difficult to secure credit for meritorious service. Although I had certain expectations, seeingthe almost sole hope of securing a reduced sentencing tier for the client shattered, I felt deeply disappointed. What could be done? Only by securing a reduced sentencing tier would there be a further possibility of obtaining a sentence of less than three years or even probation for the client.

However, I was unwilling to accept this outcome and determined not to give up so easily. Although the hope of securing credit for meritorious service had been dashed,this effort was not entirely meaningless, because through communication with the police officers, I learned that：such illegal and criminal conduct is rare, even for grassroots police officers who handle a large volume of cases annually. Moreover, they do not proactively initiate investigations into such cases. Therefore, it can be concluded that my client’s business operations do not fall within the scope of strict enforcement crackdowns by law enforcement authorities.

Based on the above understanding, after the hope of securing credit for meritorious service was extinguished, I formed a bold idea: I wanted to take a chance and argue whetherthe client’s conduct did not constitute a crime?

However, if pursuing a not-guilty defense, there remained a significant obstacle: According to the client’s statement, during his initial deposition, due to his first experience with such a scenario, feelings of panic and fear, and the pressure of an interrogation lasting ten hours, hemade statements in the interrogation record indicating his willingness to plead guilty and accept punishment.。

Given that the client had pleaded guilty and accepted punishment, and there was no dispute regarding the legal characterization that his conduct constituted a crime, a not-guilty defense strategy was clearly a high-risk move. The consequences of such an unconventional approach would ultimately be borne by the client himself, and I had no authority to make this decision unilaterally.

Therefore, upon forming this idea, I immediately called the client to briefly explain my thoughts. He was very excited upon hearing this proposal over the phone, so we promptly scheduled a meeting at the law firm. I still remember clearly that afternoon, from 1:30 p.m. until 8:00 p.m., for more than six hours, I outlined the current objective circumstances of the case,the pros and cons of the current situation, my defense strategy, the available options, and the corresponding defense strategies, and I engaged in thorough communication with the client.

At the end of this conversation, he looked at me, his eyes filled with worry, helplessness, and expectation, and asked softly, "Attorney Shao, what are the worst-case and best-case outcomes for my case?" 

Although it was difficult to say, I had to make sure the client clearly understood the current situation: "Based on legal provisions and existing case precedents, if found guilty, you may be sentenced to six to seven years of fixed-term imprisonment. As for the best-case scenario, based on an analysis of the circumstances of this case, I believe there is an opportunity to strive for a not-guilty verdict."Even though you have previously made a guilty confession, lawyers have the right to independently exercise their right to defense, which means that even if the client pleads guilty, under legal provisions, the lawyer can still plead not guilty."

Hearing this, he fell into deep thought. After a moment, he slowly stood up and said, "I'll go outside for a cigarette." I nodded slightly and responded, "Alright, I'll wait for you to come back." He turned and walked towards the door, his steps somewhat heavy. I sat in the conference room, waiting quietly, silently praying in my heart that he would soon sort out his thoughts.

Time passed minute by minute. After waiting for about half an hour, he finally returned. This time, what I saw in his eyes was calmness and relaxation. He said:

"Attorney Shao, let's proceed according to the plan you mentioned. I hope you will help me plead not guilty. Regardless of the outcome, I trust you."

When XX introduced you to me, I was worried that you were so young and wondered if you could handle my case well. But after these months of communication, I can feel your seriousness, responsibility, and all-out work ethic. With the case in your hands, I am very reassured."

I believe you will do your best to strive for the best possible outcome. Even if the result is not ideal, I will have no regrets."People must pay for their own cognitive choices....if I ultimately face incarceration, I will mentally prepare myself for that possibility.”

In my daily practice, I have always maintained a calm and rational demeanor when communicating with clients. Even when providing emotional support to family members and clients, I exercise restraint in my expression. Therefore, faced with such candid and unreserved trust from the client, I found myself at a loss for words.

In short, I felt the weight of this profound trust. After this conversation, what I felt was no longer pressure, but a strong sense of determination.

5、Devoting full effort, engaging in multiple rounds of communication, and continuously advancing the defense work

During the public security investigation stage, it is unrealistic to expect the authorities to voluntarily withdraw the case in the absence of overwhelming evidence proving the client’s innocence. Therefore, we had to extend our defense efforts to the procuratorate stage.

For cases involving release on bail pending trial, the judicial handling period is relatively lengthy. After approximately one year, the public security bureau finally transferred the case to the procuratorate. I immediately contacted the prosecutor to arrange for review of the case file.

Based on the review of the case file, I engaged in multiple telephone and in-person communications with the prosecutor and submitted several versions of legal opinions. The key points of the defense are summarized as follows:

“Legal Opinion on Innocence in the Case of XX Alleged Illegal Business Operations”

6、The procuratorate ultimately decided to return the case to the public security organs for dismissal.

One afternoon, I suddenly received a call from my client, his tone fraught with anxiety: “Attorney Shao, the prosecutor just called and asked me to come in at 3 p.m. today to give a statement… Am I going to be arrested?”

After several communications with the prosecutor, I could roughly anticipate the likely outcome. However, as the final decision had not yet been issued, I deemed it inappropriate to provide a definitive conclusion prematurely. Therefore, I simply reassured him, “It will be fine; do not overthink it. I will accompany you there this afternoon.”

Since attorneys are not permitted to be present during the taking of statements, I waited outside for him to emerge. The statement-taking process lasted approximately one hour. When he came out, he appeared visibly relieved. I asked him what questions the prosecutor had posed. He replied, “He mainly asked me to repeat the same questions as before; nothing else significant. I asked the prosecutor how many years I might be sentenced to, but he did not say. However, I felt that the prosecutor’s attitude was quite favorable this time. At the end, the prosecutor told me not to engage in such activities in the future. I said I understood and that I had closed my shop long ago. Additionally,”“the prosecutor also remarked, ‘Your lawyer is very diligent.’”。”

Hearing this, I felt that the outcome was largely as expected. It was likely good news! As the procedural steps had not yet been completed, the prosecutor did not announce the result on the spot. Subsequently, I advised my client to keep his phone accessible and simply await further notice.

As anticipated, one month later, we received the long-awaited good news!

(Indeed, the procuratorate returned the case to the public security organs, which then dismissed the case.)

By this time, nearly two years had passed since the incident occurred. Although I had consistently advised my client to maintain a balanced mindset, I was well aware that he had spent each day amidst uncertainty and anxiety. Therefore, throughout these two years, I dared not relax in the slightest. Fortunately, our persistent efforts and dedication ultimately yielded a positive result.

7. Why Should Attorneys Defend “Bad People”? Reflections Prompted by This Case

I often observe online that the following topic continues to spark sustained discussion:Why Do Lawyers Defend the "Bad Guys"?

To be honest, during my student days, when I was still a law student, I had similar reflections: From a legal perspective, what exactly constitutes a "bad guy" and what constitutes a "good guy"? Is a "criminal suspect" invariably a "bad guy"? Do judicial authorities ever mishandle cases? For instance, in criminal cases such as "Dying to Survive," if the defendant is convicted and sentenced, is the punishment truly commensurate with the crime? ...

(Still from the film "Dying to Survive," adapted from a real case)

After graduating with my master's degree, when faced with career choices, I chose to become a lawyer. This very case wasthe first criminal case I handled after becoming independent from my team.。

In fact, I am deeply grateful to my client in this case.He did not harbor any prejudice against me because I am a female lawyer, relatively young, and have a baby-faced appearance.

On the contrary, through our communications, he perceived my professional judgment and rigorous approach to handling the case, thereby choosing to place his full trust in me.

This trust strengthened my confidence and clarified my direction to continue pursuing a career in criminal defense.

More importantly, this case made me profoundly realize that—

in criminal cases, there are no absolute "good guys" or "bad guys," nor is there a single "truth" that can provide an answer applicable to all cases.

The significance of law lies not in blind punishment, but in using reason to clarify right from wrong and using procedure to safeguard the legitimate rights and interests of every individual.

The value of a criminal defense lawyer may lie not in winning a case, but in using each defense to help reduce wrongful convictions and advance justice in society.

It is for this reason that I am passionate about this profession and remain committed to speaking out for those who “may be misunderstood.”

(End of article. Relevant details have been modified to protect the privacy of the parties involved.)