"Investigation Beforehand" seen through a failed fraud case

This article illustrates that the credit investigation plays an important role in prevention beforehand through a small case. The author of this essay is an experienced investigator with unique insights and the case told by him is vivid, typical and thought-provoking.

With more and more frequent commercial communications and the abruptly increase of business trade and investment, various kinds of mishandling are appearing. Some illegal businessmen are gaining profit regardless the means. Therefore, all kinds of commercial frauds are becoming common occurrences. The case of failed fraud in Haishi is just one example.

A. Case

One commercial trade company In Haishi (company A) developed rapidly in these years and annual turnover increased from several million Yuan at the beginning to several hundreds of million Yuan at present. Since the present office no longer met the requirement of the development, company A was looking for a new office location urgently. This news was spread widely without striking a blowing. Soon, an intermediary company came and introduced a location (run by company B) to company A as it expected. Within a week, company A and company B signed a real estate purchase contact by the communication of the intermediary company. Company A intended to buy the current office of company B at 30 million Yuan. Just before the decisive moment of payment, the superior administration of company A came to Haishi to check the work and suggested A should not pay temporarily, and an investigation about the real situation of the new location and its owner be conducted to guarantee the security.

B. Field investigation

Steele, the professional institution of commercial fraud prevention, accepted the commission of company A and succeeded in finding out a failed fraud co-committed by the intermediary company and the seller.

It turned out that the legal representative of company B was a foreign individual businessman at the beginning of the establishment of company B, which was founded in cooperation with local village committee. The latter provided the land and the factory buildings as the operation location of company B. This individual businessman contracted the company, assigning himself as legal representative and president, engaging in the business of high-class apparels and hand-made art objects in this valuable field. Several years later, it suffered a loss of more than one million Yuan because of poor management, and the company was close to bankruptcy with burden of debts. When he was informed from his fellow town-man working in a real estate intermediary company that A was looking for office location, they co-plotted this fraud of stealing chickens to lay eggs and cheating money out of A.

1. The fellow town-man introduced the office of company B (in fact owned by village committee) to company A. He would get a commission of 5% of the selling price of the building if done.

2. It was in charge of company B to "prepare" related documents, to negotiate with company A with an offered price of 35 million Yuan and a base price of 30 million Yuan.

3. In order to meet the anxiety of company A, B promised to go through formalities of real estate ownership transfer within one month after company A signed the contract and paid.

It was confirmed by local administration of real estate that the real estate B attempted to sell was in reality owned by the village committee of Songjiang Village , Xiaojiang District. As one of the shareholders, the village committee knew nothing about that before Steele went to investigate. The Director of village responded angrily that it was quite absurd that company B did not pay the contract fee, and now even tried to sell their real estate without their permission.

An inquiry in local court revealed that two creditors had charged company B in succession because of long-term debt. Being eager to find one way out of its difficulties, company B violated the law.

C. Analysis and suggestions

Here it is not our goal to describe the premeditated fraud of company B or the anxiety for a quick result of company A, but to show the valuable consciousness of "investigation beforehand" of the superior administration of company A. If the superior company hadn't come to check its work, or hadn't had such consciousness, company A must have fallen into the trap co-plotted by company B and the intermediary company, and have not only lost 30 million Yuan, but also faced a rattrap probably.

Just like battleground, the business field is volatile; there can never be too many deceptions. There are commercial frauds at any place at any moment. In order to prevent frauds, firstly legal concepts must be strengthened and consciousness of investigation beforehand must be increased so that to know enemy as well as yourself to fight a hundred battles without defeat. Secondly, it is necessary to get information about service institutions of fraud-prevention and then be able to contact them easily. Steele, with relatively high awareness and reputation in Beijing , provides investigation services as follows:

1. Safeguarding business security and anti-fraud investigation

2. Fraud related to insurance claims investigation

3. Collecting evidence before and after lawsuit

4. Investigating commercial credit

5. Investigating pre-employment

6. Investigating the background