Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the personal views of the author and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66
Introduction:
Some detained defendants, seeking leniency in sentencing or influenced by the prisoner’s dilemma, may choose to report and expose their co-defendants in the hope of reducing their own criminal liability.
Is it effective? No, it is not.The court will hold that reporting and exposing co-defendants is an inherent obligation arising from the defendant’s duty to truthfully confess. Such conduct cannot be recognized as meritorious service.
All these efforts may amount to nothing more than futile busywork. However,if the co-defendant who was reported and exposed is arrested as intended but is ultimately acquitted,then the situation becomes quite interesting.
Today, we recount a story adapted from a real case.
Author: Attorney Shao Shiwei
01
Background
The incident arose because a certain arcade had placed gambling machines on its premises. After losing money, a gambler reported the matter to the public security authorities, leading to the arrest of the arcade owner. There was little controversy over the facts: it was an objective fact that the arcade had installed gambling machines, and it was also established that arcade staff were responsible for crediting and debiting betting points. Coupled with testimonies from numerous gamblers, the case against the owner appeared solid. The owner made
The principal offender was sentenced to three years of imprisonment, and the employees who were hired were each sentenced to more than one year. The matter could have ended there.
However, the owner (hereinafter referred to as "B") felt aggrieved. B was not the only person involved in operating the arcade; there were five partners in total, namely A, B, C, D, and E. B thought: "Why was I the only one arrested? I will not bear this burden alone! We operated the arcade for several years without making any profit; since we did not share the gains, we should at least share the hardships. Perhaps if I serve my sentence...
...I might still be able to seek a reduction in my sentence...? Never mind; I will not suffer this loss alone!"
Accordingly, while awaiting sentencing in the detention center, B wrote a detailed report exceeding ten thousand words, providing information on others' alleged misconduct.
As for the four shareholders outside? They had been living in fear, worried about whether B would disclose incriminating information while in custody. Because B appealed the first-instance judgment, the case went through both the first and second instances. The four shareholders remained anxious for over a year. When the second-instance judgment was rendered and they learned that B had been sentenced to three years, their anxieties were finally alleviated, and they felt reassured.
Unexpectedly, three months later, the police still came to their doors.
02
What is destined to happen will eventually happen.
The four shareholders were originally close partners in a joint venture, but faced with imminent legal peril, each looked out only for themselves. When the police officers began questioning them one by one: "Are you also a shareholder of the arcade?" A, C, D, and E inwardly exclaimed in unison: "That B! Damn it, what a scoundrel! He should have just served his sentence quietly instead of dragging us down with him!"
drag them down!
Although B claimed that there were five shareholders who jointly invested in the arcade, he stated that no written agreements had been signed among them. Therefore,how could it be proven that the other four individuals were shareholders?The police had to rely primarily on the statements of the parties involved. Accordingly, they commenced investigations of the relevant persons.
The sequence of taking statements also matters. Investigators typically start with peripheral individuals, who are less likely to lie due to their lack of vested interests.
Accordingly, the first individuals questioned were F and G, two employees of the arcade.
F stated as follows: The arcade has always been operated by B and D. A occasionally visits. I reconcile accounts with B at the end of each workday. There is a WeChat group that includes F, G, A, B, C, and D. The gambling machines have been on the premises since the arcade opened. Occasionally, officials come to inspect; when they do, they order us to close the store, usually for one or two days.
Afterward, the owner reopens the business, as the owner is able to handle those officials.
G stated as follows: I am not clear on the specifics of the owners’ arrangements, but I have occasionally heard Owner B say that the store was jointly established by A, B, C, and D; B, C, and D provided capital, and the premises were leased from E. Day-to-day management is handled by B and D, both of whom are aware of the presence of gambling machines in the store. The WeChat group mentioned by F does exist; I am a member and report data to the owners on a daily basis.
Report data.
Based on the statements of F and G, it can be seen that A, B, C, and D participated in the store’s operation and management, and their capital contributions are highly likely to be factual. However, the employees do not know whether E is a shareholder; they only know that the premises were leased from E.
Therefore,Is E a shareholder of the company?This can probably only be clarified by questioning A, B, C, and D.
03
Brain-Teasing Moment
B is the whistleblower and claims that all five individuals are shareholders. What did A, C, and D say?
D: B and D are close friends. The two had previously invested together in an arcade business, but unfortunately did not make a profit. Therefore, when D heard that B was planning to start another venture, D was immediately interested and promptly invested RMB 500,000 to support his friend’s entrepreneurial efforts, hoping to recoup all previous losses. Unfortunately, this investment also resulted in a loss. During this investment period, D received only one payment of RMB 3,000 as wages.
and nothing else. D requested that B refund a portion of his investment, but B refused.
Additionally, D stated that he did not know A. The daily operations of the establishment were handled solely by B and himself; C was not involved.
B informed D that E had been given a 30% equity stake without capital contribution (dry shares) because E had connections and could secure the necessary permits.
C: One day, E called me, stating that he could obtain the permits for the arcade. B also called me, saying that he had experience operating game arcades. B and E invited me to join the venture. On a certain day, A, B, C, and E held their first meeting at E’s establishment to discuss opening the arcade. E stated that, since he could secure the permits, he would not contribute capital but would require a 30% equity stake. E also proposed that he could provide
the premises for the shop, with the rent to be deducted by B from the capital contributions. The other parties were each to contribute RMB 500,000, and the permits would be registered under A’s name. After the meeting, everyone went home to gather the funds.
A few days later, the four individuals held another meeting. A reneged, claiming he had no money. Consequently, B invited his friend D to invest as a shareholder. E stated that it was inconvenient for him to appear publicly and entrusted A with management responsibilities. E, D, and A were all aware that B was placing gambling machines in the arcade. As E was the initiator, the placement of gambling machines necessarily required E’s consent.
I was only responsible for providing capital. B mentioned to me his intention to install two gambling machines, and I told him to handle it at his discretion.
D was responsible for capital contribution and management. A was appointed by E to supervise the operations of the establishment. E secured the permits and provided the premises. There was a WeChat group created by the two store employees and A, B, C, and D, but it was dissolved shortly after its creation due to poor business performance.
A: One day, E called me, stating that he could obtain the permits for the arcade, and asked if I wanted to participate. I said I had no money. He said he could recruit additional participants. On a certain day, at E’s establishment, those present included A, B, E, and C’s older brother. It was agreed at the establishment that E would hold a 30% equity stake in exchange for securing the permits. B offered A a 5% equity stake without capital contribution (dry shares) on the condition that A serve as the legal representative. A stated that he did not intend to proceed and was unwilling to serve as the legal representative.
When E and A were at the animation city [arcade], B specifically introduced the gambling machines in the store, stating that profits depended on them. When the store opened, E asked me to monitor the situation. Whenever I saw E, I would update him on the store’s status. I joined the WeChat group to facilitate communication with E, but I did not accept the 5% equity stake.
[Analysis]
From the foregoing statements, it can be seen that:
D: Only A, B, C, and E were present in E’s establishment; D joined later. Therefore, D’s claim that he did not know A is plausible. However, precisely because D joined later, his knowledge of whether E held a 30% equity interest was based solely on what B told him; D had no personal knowledge of this matter.
A: According to A’s statement, C was not present in the establishment at the time. C’s brother was present at the meeting. If A’s statement is true, then any agreement regarding equity interests could only have been communicated to C by C’s brother or others. Regardless of whether A held an equity interest, it is an established fact that A conveyed information to E.
C: C’s deposition does not clarify whether C was present at both the first and second meetings (in particular, whether it was C or C’s brother who attended the first meeting; there is a contradiction between the depositions of A and C). It also fails to clarify whether E was among the four individuals present at the second meeting.
Furthermore, based on a comprehensive review of other depositions, C merely provided capital and did not participate in management or operations; consequently, C claims to have had no knowledge of the circumstances concerning the other shareholders. As for whether E was aware of the presence of gambling machines in the establishment, C merely speculated that E knew, reasoning that E was the lead organizer and that E’s consent would have been required.
Thus,what did the most key individual, E himself, state?？
E: C’s brother approached me, stating that C and B wished to obtain licenses for an arcade business and requested my assistance in facilitating matters. B promised me a 30% nominal equity interest (dry shares), which I declined. I leased the premises for the animation city to B. At the first meeting, A, B, C, E, and C’s brother were all present in my establishment. Both B and C offered me a 30% nominal equity interest, which I refused. Because B wanted A to serve as the legal representative, B promised A a 5% nominal equity interest; I do not know whether A accepted. A occasionally informed me about the operational status of the arcade.
[Analysis]
E’s deposition is concise. This is not surprising, as senior figures tend to be more reticent. Nevertheless, certain points can be distilled from E’s limited statements. For example, one of the most critical questions is who was present at the first meeting. E identified A, B, C, E, and C’s brother as attendees.
Additionally, A, C, and B all stated that E was the lead organizer, which is clearly inconsistent with E’s account. Since E expressly denied receiving any nominal equity interest (dry shares), further evidence must be sought to verify this matter.
Finally, let us examine the statements of B, the whistleblower:
1. B knew that E could obtain the license for operating an arcade and sought to cooperate with E. However, E proposed that he would not contribute any capital; the arcade would lease his premises, and cooperation would be required with his friends A and C.
2. The attendees at the first and second meetings were B, C, A, and E. At the first meeting, it was agreed that E would hold a 30% non-contributory equity interest.
3. All shareholders had inspected the gambling machines, and B explained to the shareholders how to debug the equipment.
4. E stated that he could not appear in the WeChat group, so he authorized A to join the group on his behalf, with A reporting daily operational status to E.
[Analysis]
Regarding the shareholding structure of each party, an agreement was only reached during the first meeting. However, there are three different accounts as to who attended that first meeting.
A’s account: Attendees were A, B, E, and C’s elder brother; E was to receive a 30% equity interest.
E’s account: Attendees were A, B, C, E, and C’s elder brother; E stated that shares were offered to him but he declined.
B’s account: Attendees were A, B, C, and E; E was to receive a 30% equity interest.
C’s account: Attendees were A, B, C, and E; E was to receive a 30% equity interest.
D’s account: D was not present and learned from B that E held a 30% non-contributory equity interest.
Based on the foregoing review, according to their respective statements, A, B, and C explicitly affirmed that E held a 30% equity interest. However, there remains a dispute regarding whether C was present. If C is excluded, only the accounts of A and B remain.
If B’s statement is true, then E’s awareness of risk prevention is indeed high. On the surface, he was merely a rent collector; in substance, he may have been a behind-the-scenes shareholder holding dry shares (i.e., equity interests without capital contribution). Reasonably inferred, if only E had the social connections to obtain the license, then E indeed possessed an absolute advantage in negotiations for this cooperation. B’s statement has its rationality. According to B’s statement,
C was also brought in by E, which corroborates the statements in C’s deposition transcript, such as “E called me” and “E was the lead organizer.”
04
Court Judgment
E’s defense counsel argued: The evidence accusing E of the crime of operating a casino consists solely of testimonial evidence from co-defendants; the confessions of the individuals involved all derive from B’s hearsay, failing to form a complete chain of evidence. Therefore, E should be found not guilty in accordance with the principle of “presumption of innocence when in doubt.” The court accepted this argument, holding that, pursuant to Article 55 of the Criminal Procedure Law, adjudication in all cases must emphasize evidence and investigation and research, and must not readily credit confessions.
Where there is only the defendant’s confession and no other evidence, the defendant cannot be found guilty or subjected to criminal punishment. Accordingly, the court acquitted E (while rendering guilty verdicts for A, B, C, and D).
Reading this, do you feel a trace of admiration? That the judge could apply the law so strictly—only confessions? Then presume innocence when in doubt, and the defendant is not guilty!
However, in reality, law is one thing, and practice is another. When reviewing the court’s reasoning in this case, while marveling at the judge’s courage, I found it increasingly puzzling: how could such a judgment be rendered? Upon carefully rereading the entire judgment, I felt that the more one dug into the doubts, the more emerged; the facts had simply not been clarified. I therefore searched for related judgments, and as expected,
the case was remanded for retrial by the Intermediate People’s Court, which revoked the original judgment on the grounds of unclear facts and insufficient evidence. However, the judgment after retrial has not been found. It is speculated that the final outcome was likely that E was also found guilty.
05
Review and Reflection
Defense Counsel’s Arguments:
The defense counsel’s reasoning is clearly untenable. The claim that “the confessions of the individuals involved all derive from B’s hearsay” ignores the undisputed fact that A, B, and E were all present at the initial meeting. Only D’s absence was clear, yet the court’s judgment adopted the defense counsel’s view.
Whether C was present at the meeting:
C’s interrogation record states that A, B, C, and D held two meetings. The first meeting took place at E’s store with all four individuals present. A few days later, because A did not wish to become a shareholder, the four individuals held another meeting. However, A’s interrogation record states that during the first meeting at E’s store, the person present was C’s elder brother. Therefore, the factual issue of whether C was present at the first meeting was not ascertained. Furthermore, regarding the second meeting, it remains unclear whether E’s equity interest was discussed. It is also unclear whether C’s statement that E held a 30% equity interest was based on hearsay or on statements made by E himself during the first or second meeting (i.e., whether it constitutes original evidence or derivative evidence). This issue is of critical importance in this case but was not ascertained.
Apart from the individuals involved in the case, C’s elder brother is evidently a key figure. Whether C was present, and what C’s elder brother would testify, remain unanswered. Surprisingly, he was not called as a witness.
Whether E holds an equity interest:
The statements of A, B, and C are consistent in asserting that E holds a 30% equity interest. According to B, both A and C were introduced by E. A stated that he reported to E, and C also stated that E was the lead organizer. Combined with common sense, given that E was able to obtain the necessary permits, E held a dominant position in negotiations. The meetings were also held at E’s store.
However, the awkward aspect of this case is that there appears to be only confessional evidence. Is it truly impossible to uncover any corroborating circumstantial evidence? Even if there is no other direct evidence proving that E is a shareholder, whether E participated in the company’s management could serve as circumstantial corroboration.
Given the close relationship between A and E, with A routinely reporting store operations to E, should not chat records, call logs, bank transaction statements, and similar materials reveal some corroborating clues? Why does this case rely solely on confessional evidence?
Whether E was aware of the gambling machines in the store and participated in their management:
Although E’s confession does not address whether he was aware of the presence of gambling machines in the store (it is presumed that he denied such knowledge; if E had admitted it, would the judgment not have explicitly stated so? That would be illogical), the descriptions provided by A, C, and D suggest that it is highly probable that A, B, C, D, and E were all aware of the gambling machines in the store. A reported the store’s operational status to E. According to the interrogation records on file, this fact is undisputed.
If E were merely a landlord collecting rent, why would he need A to inform him of the store’s operational status?
Basis for the court’s judgment:
The court’s reasoning states that it is inappropriate to convict directly based on confessions, which is correct. However, the facts of the case itself were not clearly ascertained. Pursuant to Article 14 of the Organic Law of the People’s Courts of the People’s Republic of China, where a people’s court finds that the main facts are unclear, the evidence is insufficient, or there are illegal circumstances in a case prosecuted by the people’s procuratorate, it may remand the case to the people’s procuratorate for supplementary investigation or notify the people’s procuratorate to make corrections.
supplementary investigation by the procuratorate, or notify the People's Procuratorate to make corrections.
Concluding Remarks:
This article examines the case from a neutral adjudicatory perspective. It aims to illustrate that only when the facts are clear and the evidence is reliable and sufficient can the standard for adjudication be met. If judges or prosecutors believe that the facts of the case have not been fully ascertained, the court may remand the case to the procuratorate for supplementary investigation, and the procuratorate may remand it to the public security organs for supplementary investigation, rather than directly rendering a not-guilty ver
dict.Such a “not guilty” finding is untenable, as internal supervisory mechanisms within the courts and external supervision by the procuratorate, among others, may still overturn the original judgment. In such circumstances, forthe defendant acquitted, this would mean continuing to await an unresolved outcome over a prolonged period, which is also unfair to other defendants.。
