Commentary on Article 190. Fraud of the Criminal Code of the Republic of Kazakhstan

1. Fraud, that is, the theft of another person's property or the acquisition of the right to another person's property through deception or abuse of trust, —

shall be punishable by a fine of up to one thousand monthly calculation indices, or corrective labor in the same amount, or community service for a period of up to six hundred hours, or restriction of liberty for a period of up to two years, or imprisonment for the same period, with confiscation of property.

2. Fraud committed:

1) by a group of persons upon prior conspiracy;

2) repealed by Law of the Republic of Kazakhstan dated January 21, 2019 No. 217-VI;

3) by a person using his or her official position;

4) through deception or abuse of the trust of a user of an information system;

5) in the field of public procurement, —

shall be punishable by a fine of up to four thousand monthly calculation indices, or corrective labor in the same amount, or community service for a period of up to one thousand hours, or restriction of liberty for a period of up to four years, or imprisonment for the same period, with confiscation of property, and deprivation of the right to hold certain positions or engage in certain activities for a period of up to three years, or without such deprivation.

3. Fraud committed:

1) on a large scale;

2) by a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public position, where it is associated with the use of his or her official position;

3) against two or more persons;

4) repeatedly, —

shall be punishable by restriction of liberty for a period of three to seven years or imprisonment for the same period, with confiscation of property, and, in the cases provided for in subparagraph 2), by a fine ranging from ten to twenty times the value of the stolen property or imprisonment for a period of three to seven years, with confiscation of property and lifelong deprivation of the right to hold certain positions or engage in certain activities.

4. The acts provided for in Parts One, Two or Three of this Article, if committed:

1) by a criminal group;

2) on an especially large scale, —

shall be punishable by imprisonment for a period of five to ten years, with confiscation of property, and lifelong deprivation of the right to hold certain positions or engage in certain activities, or without such deprivation.

The public danger of fraud lies in the fact that it violates social relations concerning property, regardless of its form, which are associated with the procedure for distributing material goods established by the state, relating not only to property itself but also to rights to property. As a result of fraud, on the one hand, the owner or other possessor of property or a right to property loses that property or right, which causes them property damage; and, on the other hand, the person who unlawfully takes possession of such property or right to property through deception or abuse of trust, that is, outside and contrary to the procedure for distributing material goods established by the state, enriches himself or herself by an amount equal to the value of the property, or obtains the opportunity to become enriched at the expense of the right to property in the corresponding amount.

The object of the crime is the right (relationship) of ownership.

The subject matter of the crime under consideration, as in the previously discussed criminal offenses, is another person's property possessing the characteristics described above. At the same time, the subject matter of fraud may be not only property but also a right to property. Documents granting the right to receive property, including money, may constitute the subject matter of fraud in cases where they are equivalent to property and represent carriers of a certain value. These include bearer securities, including monetary and payment documents, that is, documents containing certain property rights, which can be exercised only upon presentation of such a document. They also include, for example, bonds, certificates, monetary and commodity lottery tickets, etc. Taking possession of such documents is equivalent to taking possession of the material assets themselves. They serve as substitutes for material assets, and their loss means direct damage to the victim and a reduction in their material wealth, because in such cases the property benefits embodied in them are also lost together with the documents.

As regards the legal nature of property, the subject matter of fraud may be property or a right to property that does not belong to the perpetrator by right of ownership. Moreover, the latter has neither an actual nor even an alleged right to dispose of this property as his or her own, since the property belongs by right of ownership to another person, that is, it must be чужое for the perpetrator.

From the objective side, the law defines fraud as the theft of another person's property or the acquisition of the right to another person's property through deception or abuse of trust. Thus, four methods of committing fraud can be distinguished:

• theft of another person's property through deception;
• theft of another person's property through abuse of trust;
• acquisition of the right to another person's property through deception;
• acquisition of the right to another person's property through abuse of trust.

Deception in fraud may take the form of an intentional false statement concerning facts that are known not to exist, or the concealment of facts that, under the circumstances of the case, should have been disclosed to the owner or possessor of the property.

Fraud is committed through deception or abuse of trust, under the influence of which the owner or another possessor of property voluntarily transfers the property or the right thereto to other persons (paragraph 1 of the Normative Resolution of the Supreme Court of the Republic of Kazakhstan dated June 29, 2017, “On Judicial Practice in Cases of Fraud”).

Deception is a method of committing fraud for the purpose of stealing another person's property or acquiring the right to another person's property. Deception may consist of the perpetrator deliberately misleading the owner or another possessor of property by communicating knowingly false information that does not correspond to reality, or by concealing true facts that should have been disclosed to the owner or possessor of the property, thereby creating in the property owner or another person an erroneous impression regarding the lawfulness of the transfer of the property into the possession of the perpetrator and/or other persons.

As a result of deception, the owner or another possessor of the property, having been misled, voluntarily transfers the property to the perpetrator, believing that there are grounds for doing so and that he or she is acting in his or her own interests.

Deception is not merely an influence on another person's consciousness but also, indirectly, through the victim's consciousness, an influence on that person's will. In this regard, it is necessary to distinguish between the expression of will as its outward manifestation and the actual (internal) will of a person. A person under the influence of deception performs an action (or omission) contrary to his or her actual will, since the expression of will has been formed under the influence of circumstances that distort the person's true (internal) will. Therefore, the “voluntary” nature of an action performed by a deceived person is merely apparent, since the deceived person acts on the basis of a will that has been influenced by deception.

Outwardly, such a transfer appears voluntary; however, this voluntariness is illusory, since it is caused by deception. The existence of deception makes it impossible to regard the transfer (assignment) of a property benefit by the victim to the perpetrator or other persons as having been made on the basis of a genuine and untainted will. Having been misled, the victim acts in the interests of the fraudster or other persons on the basis of false grounds that the victim does not recognize.

In fraud, deception may be expressed in either oral or written form.

The use of forged documents in the commission of theft is one form of deception. Fraud committed using an official forged document prepared by another person is fully covered by the elements of fraud and does not require additional qualification under Article 385 of the Criminal Code.

If a person who has forged an official document granting rights or exempting from obligations commits fraud, the act must be qualified under the cumulative application of the criminal offenses provided for in Part 1 of Article 385 of the Criminal Code and the relevant part of Article 190 of the Criminal Code.

In fraud through abuse of trust, the perpetrator uses the relationship of trust between himself or herself and the owner or other lawful possessor of the property to deceive that person or mislead them.

Facts are understood as circumstances that form part of processes that have actually occurred, are accessible to perception, and can be proven.

According to S. I. Ozhegov's Dictionary of the Russian Language, deception means the intentional distortion of truth; a false impression of something; untruth; misleading someone; an unscrupulous act toward someone; breach of a promise; and other similar conduct.

The Large Explanatory Dictionary of the Russian Language explains that deception means words, actions, conduct, etc., that necessarily mislead others. The same Dictionary interprets the verb “to deceive” as “to act dishonestly; to resort to fraud or deception for selfish purposes.”

In legal literature, deception is defined as the conscious distortion of truth (active deception) or concealment of the truth, consisting of withholding facts or circumstances that, in the course of a bona fide transaction conducted in accordance with the law, should have been disclosed.

Deception in the criminal offense under consideration may take an active form or be expressed through passive conduct. Active deception consists of deliberately misleading the owner or another possessor of property by communicating false information, providing forged documents, and taking other actions that create an erroneous impression in that person's mind regarding the grounds for transferring the property into the possession of the perpetrator and create the illusion that such transfer is lawful. Passive deception consists of failing to disclose to the victim information about circumstances, knowledge of which would have prevented the victim from disposing of the property. Passive deception also includes concealing circumstances whose occurrence substantially changes the terms and substance of property-related legal relations.

Deception as a method of committing fraud may be expressed not only in the distortion of facts that existed in the past or exist in the present, but also in statements concerning circumstances that, according to the fraudster, are expected to occur in the future.

It should be noted that, in the case of theft committed through fraud, false information about certain circumstances that provide grounds for obtaining property is not merely communicated; it is also supported by deceptive actions intended to mislead the person who possesses or controls the property and convince that person of the necessity of transferring the property to the perpetrator. Such deceptive actions must be causally connected with the fact that the perpetrator obtains the property, that is, they must precede the transfer of the property and cause that transfer. This is what distinguishes fraud from forms of theft accompanied by deception. For example, in theft, deception may be used to gain access to a storage facility; in misappropriation or embezzlement of entrusted property, it may be used to conceal a shortage; and in robbery, where the victim hands a mobile phone to another person who asks to make a call, deception may be used to take possession of the phone and immediately flee with it.

This position is also shared by the Supreme Court in its Normative Resolution “On Judicial Practice in Cases of Fraud.” Paragraph 7 of the aforementioned Resolution emphasizes that where deception is used by a person to facilitate the commission of another crime involving the theft of another person's property, and during the commission of that crime the person's actions are discovered by the owner or another possessor of the property, but the person nevertheless continues to unlawfully retain the property against the owner's will, the act must be qualified as robbery (for example, a person asks the owner of a mobile phone to make a call and then immediately runs away with it in the owner's presence).

Various forms of deception concerning the subject matter of a transaction should be regarded as a common method of fraud. Such deception consists of falsifying the appearance, properties, quality, quantity and other characteristics of various items offered for sale or exchange. For example, tinted water is sold instead of ginseng tincture (deception as to the subject matter of the transaction); instead of money, the victim is handed a bundle — a so-called “dummy”; metal of a yellow color resembling gold is sold at the same price instead of a gold ring; a smaller quantity of goods is delivered than was agreed upon; and other similar acts. The manufacture, possession, transportation or sale of counterfeit money or securities constitutes counterfeiting, liability for which is established by Article 231 of the Criminal Code. However, the manufacture through counterfeiting of banknotes that can be used only to deceive individual citizens constitutes fraud.

Deception may also concern circumstances relating to the perpetrator personally. For example, a fraudster may present himself or herself as an official who has the ability to perform certain actions in the victim's favor: arranging admission to a university, securing a prestigious and highly paid position, etc. A common means of deception in fraud is the use of a uniform by a person who has no right to wear it, or impersonating a law enforcement officer and thereby obtaining certain valuables from citizens (fines, fees).

Previously convicted G. entered a dormitory room and saw C. and A. inside. Introducing himself as a police officer, he told those present that the property in their room was stolen and had to be seized pending clarification of the circumstances. In this way, G. stole property worth 61,800 tenge. The preliminary investigation authorities and the court correctly qualified G.'s actions under the cumulative application of the criminal offenses as fraud committed repeatedly and unlawful appropriation of the title of a representative of authority.

Any deception must be considered fraudulent if it is aimed at arousing in the victim a desire or consent to transfer property or a right to property to the fraudster. At the same time, an essential condition of the fraud under consideration is that deception acts as a means of influencing the victim's consciousness, a means of suggestion and persuasion, convincing the victim that the disposal of the property is being carried out on the basis of law or other legal acts and in the victim's own interests.

The second method of fraud identified by law is abuse of trust, in which the perpetrator, for the purpose of unlawfully obtaining property or a right to property, uses the perpetrator's special powers or personal relationships of trust established between the perpetrator and the owner or another possessor of the property, thereby deceiving that person or misleading them.

Abuse of trust as a method of fraud consists of the perpetrator using the trust that has arisen between him or her and the owner or another person who controls the property for the purpose of unlawfully obtaining another person's property or a right thereto for selfish motives.

The owner's or another person's trust in the fraudster may arise from various circumstances: personal acquaintance, recommendations from relatives and other persons, the perpetrator's official position, etc.

In explanatory dictionaries and philosophical literature, trust is defined as confidence in someone's good faith and sincerity, or in the correctness of something. Consequently, from the standpoint of the Russian language, abuse of trust consists of a person's unlawful or unscrupulous use of other people's confidence in that person's good faith and sincerity.

The basis of the relationship of trust between the fraudster and the victim may consist not only of legal grounds but also of other circumstances giving rise to such a relationship: personal acquaintance, a recommendation from relatives, the specific situation that has arisen, etc. It is important that, by its nature, such a relationship makes subsequent abuse possible, that is, the commission of deceptive acts.

Judicial practice experiences difficulties in distinguishing between deception and abuse of trust. This is evidenced by an analysis of convictions in fraud cases, in the descriptive and reasoning sections of which the following wording is usually used: “the socially dangerous act was committed by the perpetrator through deception and abuse of trust.” This circumstance is to a certain extent understandable, since deception and abuse of trust are closely interconnected.

At the same time, it should be emphasized that distinguishing between deception and abuse of trust is a requirement of criminal law, in the text of which the two methods of fraud are separated by the disjunctive conjunction “or.” Abuse of trust is an alternative method of committing fraud, expressed in the use, for selfish purposes, of trust established in legal, employment (or service-related) and/or factual relationships (family, friendship). For example, in fraud committed through deception, the perpetrator creates or reinforces in the victim's mind an erroneous belief that the transfer of property assets is beneficial to the victim or that the victim is under an obligation to make such a transfer. To create an error in the victim's mind regarding the grounds for the emergence, modification or termination of legal relations, fraudsters manipulate “facts.” Deception is a lie based on facts that do not exist. The substance of deception consists of distorting facts (for example, asserting the existence of facts that are absent in reality) or concealing certain essential circumstances, knowledge of which would have prevented the victim from taking the relevant action concerning the property.

Abuse of trust is a specific type of deception (deception of trust). Deception is the only method of committing fraud, since, in the absence of evidence that the perpetrator used deception to obtain another person's property, the elements of fraud are excluded. The second method of fraud — abuse of trust — does not occur “in isolation,” that is, without deception.

Property damage to the victim may be caused, as stated in the criminal law, not only through the taking of the victim's property consisting of money or material assets, but also as a result of the unlawful acquisition of a right to the victim's property. The acquisition of a right to another person's property should be understood as actions whereby the victim transfers to the perpetrator various documents confirming the legal possibility of acquiring certain property, by means of their submission (presentation). Such documents include various lottery tickets, receipts, powers of attorney, etc.

It is necessary to distinguish three types of acquisition of the right to another person's property through deception or abuse of trust:

• for the purpose of subsequently taking possession of it, for example, obtaining, through deception or abuse of trust, a power of attorney from a legal entity or an individual to receive funds from a bank for the purpose of stealing them;
• for the purpose of creating the appearance of lawful possession of property already held by the perpetrator, for example, the perpetrator obtaining, through deception or abuse of trust, a title document for property that he or she is already using unlawfully;
• in the form of exercising a separate power to manage another person's property without stealing it, for example, obtaining a power of attorney to dispose of a particular land plot.

Fraud is deemed completed from the moment the property being stolen is removed and passes into the unlawful possession of the perpetrator or other persons, and they obtain a real opportunity to possess, use or dispose of it at their own discretion as if it were their own.

If fraud is committed in the form of acquiring a right to another person's property, the crime is considered completed from the moment the perpetrator obtains a legally established opportunity to possess, use and dispose of another person's property as if it were his or her own, following the relevant formalization, certification or registration of that right.

From the subjective side, fraud is characterized by direct intent. According to the aforementioned Normative Resolution, an essential element of fraud is the presence of a selfish motive on the part of the perpetrator, that is, the desire to unlawfully and gratuitously convert another person's property into his or her own property, or to acquire a right thereto for his or her own benefit or for the benefit of other persons.

The perpetrator realizes that, through deception or abuse of trust, he or she is unlawfully taking possession of another person's property or acquiring a right thereto, foresees the possibility or inevitability of causing actual damage and desires to convert another person's property to his or her own benefit or to the benefit of third parties, having received it from the victim personally or from the person who controls the property.

In contractual relationships, the existence of intent to commit theft through fraud may be evidenced by a combination of circumstances such as the person's knowingly lacking the actual financial and other material capacity (material and technical resources, workforce, etc.) to fulfill the obligation undertaken, or lacking the necessary license or permit to carry out activities aimed at fulfilling contractual obligations; the use of forged constituent documents or letters of guarantee; concealment of information about existing debts or encumbrances on property; conclusion of contracts that are knowingly impossible to perform; and other circumstances.

In cases where a contract is concluded with the mutual intention of both parties to fulfill their respective obligations, but after its conclusion and receipt of material benefits one of the parties encounters objective circumstances preventing the fulfillment of the obligations assumed, the act cannot be classified as fraud.

The wording of the provision under consideration indicates that, for the elements of theft of another person's property through fraud to be established, it is necessary to determine that, at the time the property was obtained, the perpetrator had no genuine intention of ever returning it. At the same time, preliminary investigation authorities and courts do not always take this circumstance into account, which leads to errors in qualification.

Zh. purchased a tractor from A. for USD 6,000. With the purpose of stealing another person's property through deception and abuse of trust, he paid only USD 4,000. By a ruling of the Judicial Collegium of the Kostanay Regional Court, the judgment of the lower court was upheld. Having considered the case under supervisory review, the Collegium of the Supreme Court of the Republic of Kazakhstan overturned all judicial decisions rendered in respect of Zh. and terminated the proceedings due to the absence of the elements of a crime, for the following reasons. The case materials established that, after concluding the tractor sale and purchase agreement with A., Zh. paid USD 3,600 as partial payment of its price and later paid another USD 400, promising to pay the remaining amount by the end of the year. However, he failed to do so because a dispute arose between them concerning the tractor's technical condition, namely, until A. carried out its repairs. At the same time, the circumstances established by the court in this case do not indicate that, at the time of obtaining the tractor, Zh. intended to deceive A. and fail to pay part of the agreed contractual amount. The court's conclusion that Zh. had fraudulent intent was based solely on assumptions.

Under these circumstances, the matter should be regarded as a civil-law relationship.

The subject of fraud is a sane individual who has reached the age of 16.

Part 2 of Article 190 of the Criminal Code provides for the following qualifying circumstances: “1) commission by a group of persons upon prior conspiracy; 2) repealed by Law of the Republic of Kazakhstan dated January 21, 2019 No. 217-VI; 3) commission by a person using his or her official position; 4) commission through deception or abuse of the trust of a user of an information system; 5) commission in the field of public procurement.”

For a description of the qualifying circumstances provided for in subparagraph 1) of Part 2 of Article 190 of the Criminal Code, see the commentary to Article 188 of the Criminal Code, and for those provided for in subparagraph 3) of Part 2 of Article 190 of the Criminal Code, see the commentary to Article 189 of the Criminal Code.

Persons using their official position when committing fraud under subparagraph 3) of Part 2 of Article 190 of the Criminal Code should be understood as employees or officials to whom the provisions of the Law of the Republic of Kazakhstan dated November 23, 2015, “On Civil Service of the Republic of Kazakhstan,” do not apply.

Fraud involving the use of official position is absent in cases where a person misappropriates or embezzles property entrusted to that person on the basis of a civil-law contract (lease, contract for work, commission, carriage, storage, etc.) or an employment contract. Such actions are covered by Article 189 of the Criminal Code.

The actions of organizers, instigators and accomplices to fraud, where they knowingly facilitate its commission by a person using his or her official position, or by a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public position, where the offense is associated with the use of official position, are qualified under the relevant part of Article 28 of the Criminal Code and Parts 2 or 3 of Article 190 of the Criminal Code.

Subparagraph 4) of Part 2 of the Article under consideration provides for fraud committed through deception or abuse of the trust of a user of an information system. According to subparagraph 52) of Article 1 of the Law “On Informatization,” a user is an informatization entity that uses informatization facilities to perform a specific function and/or task. An information system is defined as an organizationally structured set of information and communication technologies, service personnel and technical documentation that implement certain technological operations through information interaction and are intended to solve specific functional tasks (subparagraph 12) of Article 1 of the Law “On Informatization”).

Fraud committed through deception or abuse of the trust of a user of an information system should be understood as the actions of a perpetrator aimed at obtaining possession of the property or the right to property of an information system user, committed through information technologies (a computer, computer programs, the Internet, a mobile phone, etc.), by placing knowingly false information or programs in an information system for the purpose of implementing the criminal intent to deceive the user through a Qiwi wallet, Internet banking, etc. (paragraph 9 of the Normative Resolution of the Supreme Court “On Judicial Practice in Cases of Fraud”).

Where such acts are accompanied by unauthorized access to an information system or telecommunications network, the act is subject to qualification under the cumulative application of criminal offenses under Articles 190 and 205 of the Criminal Code or Articles 190 and 206 of the Criminal Code, if unauthorized access to computer information resulted in its destruction or modification, or disruption of the operation of a computer, computer system or network thereof.

Subparagraph 5) of Part 2 of the Article under consideration provides for the qualifying circumstance of “fraud in the field of public procurement.”

According to subparagraph 14) of Article 2 of the Law of the Republic of Kazakhstan dated December 4, 2015, “On Public Procurement,” public procurement means the acquisition by customers of goods, works or services, in whole or in part, using budget funds and/or their own revenues, with the exception of revenues associated with the provision of services to non-residents of the Republic of Kazakhstan.

Fraud in the field of public procurement means the actions of a perpetrator (supplier), including the submission of knowingly false information (concerning financial or economic standing, the availability of employees, technical equipment, etc.) for the purpose of deception, which deliberately misleads the customer or organizer of public procurement in order to convert budget funds to the perpetrator's own benefit or to the benefit of third parties, as a result of which the supplier, without delivering goods, performing work or providing services, appropriates the allocated funds.

Where an authorized representative of the customer knowingly draws up a fictitious acceptance and transfer certificate for goods, work performed or services rendered, after which funds are transferred to the supplier's account and the supplier converts them into his or her own property and disposes of them at his or her discretion, such actions by the supplier do not constitute fraud. Depending on the circumstances established, the actions of the authorized representatives of the customer or the supplier may be qualified as abuse of official authority or theft of another person's entrusted property through misappropriation or embezzlement (paragraph 16 of the Normative Resolution of the Supreme Court “On Judicial Practice in Cases of Fraud”).

The unlawful receipt, for selfish motives, of social payments and benefits, money transfers, bank deposits or other property on the basis of another person's personal or other documents (for example, a pension certificate, a child's birth certificate, a bank savings book bearing the name of its owner, or another registered security, etc.) constitutes fraud.

If the perpetrator previously stole the aforementioned documents, his or her actions must also be additionally qualified under Part 3 of Article 384 of the Criminal Code.

Actions consisting of obtaining social payments and benefits, other monetary payments or other property by submitting knowingly false information to an authorized body responsible for making the relevant decisions concerning the existence of circumstances that, under the law, a subordinate regulatory legal act and/or a contract, constitute conditions for receiving the relevant payments or other property, as well as by concealing the termination of the grounds for receiving such payments, must be qualified as theft of another person's property through deception.

The gratuitous conversion, for selfish purposes, of funds held in bank accounts to the person's own benefit or to the benefit of other persons, committed through deception or abuse of the trust of a bank employee by submitting forged payment orders or another person's personal or other documents to the bank, is classified as fraud.

Obtaining a subsidy or loan without any intention of repaying it, for the purpose of converting it into one's own property through deception by providing knowingly false information about one's financial position, collateral property or other circumstances of material significance for obtaining the loan or subsidy, constitutes fraud.

From the moment money is credited to a bank account as a result of fraud, the person obtains the opportunity to dispose of it, and the crime must be considered completed from that moment.

The theft of another person's funds through an ATM by using a previously stolen or counterfeit credit (debit) card or bearer securities (bonds, bills of exchange, shares, etc.) does not constitute fraud. In this case, the act must be classified as theft of another person's property.

Actions related to the theft of another person's funds held in a bank account through the use of a stolen or counterfeit credit or debit card should be classified as fraud through deception or abuse of trust only in cases where the person has misled an authorized bank employee through deception or abuse of trust (paragraphs 12, 13, 14, 15 and 16 of the Normative Resolution of the Supreme Court “On Judicial Practice in Cases of Fraud”).

Part 3 of Article 190 of the Criminal Code provides for the following particularly qualifying circumstances:

• commission on a large scale;
• commission by a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public position, where the offense is associated with the use of his or her official position;
• commission against two or more persons;
• repeated commission.

The actions of the perpetrator must be qualified under subparagraph 2) of Part 3 of Article 190 of the Criminal Code if, being a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public position, he or she commits intentional acts for the purpose of stealing property or acquiring a right thereto through deception or abuse of the owner's trust, using his or her official position.

Where a person authorized to perform state functions, or a person equated thereto, or an official, or a person holding a responsible public position, receives money or other valuables for performing an action (or omission) that the person is actually unable to perform due to the absence of relevant official powers or the impossibility of using his or her official position, such actions, provided there is intent to take possession of the valuables, must be qualified as fraud.

If such a person is detained at the scene of the crime while receiving money, securities or other material assets, the act must be qualified as attempted fraud.

When qualifying the actions of a perpetrator under subparagraph 2) of Part 3 of Article 190 of the Criminal Code, one must be guided by subparagraphs 16), 26), 27) and 28) of Article 3 of the Criminal Code.

The qualifying circumstances provided for in subparagraphs 1–4) of Part 3 of Article 190 of the Criminal Code are discussed in the commentary to Articles 188 and 189 of the Criminal Code.

If fraud is committed against two or more persons, the actions of the perpetrator must be qualified under subparagraph 3) of Part 3 of Article 190 of the Criminal Code.

It is necessary to distinguish continuing fraud from repeated fraud: in continuing fraud, the perpetrator, through repeated taking of another person's property from a single source, implements a single criminal intent aimed at obtaining possession of the property, thereby achieving a previously planned objective.

In distinguishing the qualifying circumstance of repeated fraud from the commission of fraud against two or more persons, it should be borne in mind that the latter is committed at one time through a single criminal act (deception of participants in shared construction, users of an information system, etc.). In the case of repeated fraud, the act is committed at different times and property is stolen from different sources.

When qualifying the actions of a perpetrator under subparagraph 1) of Part 4 of Article 190 of the Criminal Code as fraud committed by a criminal group, one must be guided by the explanations provided in subparagraphs 23), 24), 25), 33), 34), 35) and 36) of Article 3 of the Criminal Code.

The question of whether the actions of perpetrators contain the qualifying circumstance of fraud committed on a large or especially large scale must be resolved in accordance with subparagraphs 3) or 38) of Article 3 of the Criminal Code.

When deciding on the qualification of the actions of persons who committed fraud as part of a group of persons upon prior conspiracy or as part of a criminal group, with regard to the circumstances of “large scale” or “especially large scale,” the total value of the property stolen by all participants in the crime must be taken into account.

The particularly qualifying circumstances of fraud provided for in subparagraphs 1) and 2) of Part 4 of Article 190 of the Criminal Code, namely: 1) commission by a criminal group; 2) commission on an especially large scale, are discussed in detail in the commentary to Article 188 of the Criminal Code.

According to subparagraph 38) of Article 3 of the Criminal Code, an especially large scale under Article 190 of the Criminal Code means the value of property or the amount of damage exceeding the monthly calculation index by four thousand times.

Fraud must be distinguished from unlawful obtaining of a loan or non-purpose use of a budget loan (Article 219 of the Criminal Code). The criteria for distinguishing these crimes are the direction of intent and the time at which such intent arises.

In deception in the field of lending (Article 219 of the Criminal Code), the perpetrator does not pursue the goal of removing loan funds from the lender's assets, and his or her initial intentions are limited to using those funds to meet the economic and financial needs of the enterprise.

In theft, the perpetrator pursues the selfish goal of unlawfully and gratuitously taking property (funds) for his or her own benefit or for the benefit of third parties. This may be evidenced by facts such as the borrower's concealment of personal information, relocation from the place of residence without notifying the lender, immediate use of the loan after receipt for personal purposes (distribution in the form of commercial loans), and the nature of the borrower's subsequent actions after the discovery of the fact that the loan was obtained using forged documents (obstructing the receipt of reliable information about the borrower's actual financial and economic position, absconding from the lender or law enforcement authorities, etc.).

Fraud is committed with direct intent and a selfish purpose and causes only actual damage. A person who unlawfully obtains a loan, despite using deception, has no purpose of gratuitously converting another person's property for his or her own benefit or the benefit of other persons, and the intent to cause actual damage may only be indirect.

Fraud must be distinguished from violation by an issuer of the procedure for issuing equity securities (Article 224 of the Criminal Code), which is characterized by the inclusion of knowingly false information in the prospectus of an issue of equity securities, as well as the preparation of a knowingly false report on the results of the placement of equity securities.

Fraud involving the unlawful use of trade credit is widespread. It is characterized by the fact that perpetrators deliberately establish a private business entity specifically for one or several transactions using false documents, conclude a contract on its behalf under the condition of receiving property on credit with subsequent payment, and, after obtaining the property, evade repayment of the credit.

The following may be regarded as indicators of preparations for fraudulent acts involving trade credit: 1) establishment of an organization using forged documents and fictitious persons, often registered at several legal addresses; 2) a small amount of authorized capital; 3) the extremely poor financial position of the founder at the time the contract is concluded.

Fraud must be distinguished from the manufacture, possession, transportation or sale of counterfeit money or securities (Article 231 of the Criminal Code).

With regard to this issue, the Supreme Court of the Republic of Kazakhstan, in subparagraph 22) of the Normative Resolution dated January 24, 2020, “On Certain Issues of Application by Courts of Legislation in Cases of Criminal Offenses in the Sphere of Economic Activity,” explains that the sale of knowingly counterfeit money or securities committed for the purpose of unlawfully obtaining another person's property must be qualified under the cumulative application of the criminal offenses provided for in Articles 190 and 231 of the Criminal Code.

The use, as a means of deception in unlawfully obtaining another person's property, of souvenirs, medallions, postcards, artistic or photographic images, printing products and other items made in the form of the monetary signs or securities specified in Article 231 of the Criminal Code must be qualified as fraud. The actions of a person who obtains another person's property using counterfeit banknotes and securities that clearly differ from genuine banknotes and securities must also be qualified as fraud.

When distinguishing fraud from causing property damage through deception or abuse of trust in the absence of elements of theft, courts should take into account that, when deception or abuse of trust is committed without elements of theft, the perpetrator does not remove the property from the lawful possession of the owner or another person and does not acquire a right thereto. In such cases, the perpetrator unlawfully obtains a benefit by gratuitously using property, a right thereto or services provided by the owner or another person for a fee, through deception or abuse of trust, thereby causing actual material damage to the victim or another possessor of the property.

Such actions may take the form of using the property of a state body or enterprise, a private individual or a legal entity, or services provided by them, without payment (by submitting forged documents exempting the person from paying statutory charges or fees for utilities or residential rent, or for the rental of equipment; unauthorized connection to electricity networks, water or gas pipelines, creating the possibility of unmetered consumption of electricity, water or gas; or the use for personal purposes of transport entrusted to the person, such as conductors and ticket inspectors transporting passengers without tickets, etc.).

Fraud must be distinguished from the crime provided for in Article 217 of the Criminal Code, “Creation and Management of a Financial (Investment) Pyramid.”

Unlike the crime provided for in Article 190 of the Criminal Code, the object of which is social relations in the sphere of property, the object of the crime provided for in Article 217 of the Criminal Code is social relations ensuring normal financial (investment) activity.

The difference in the objective elements of these crimes is as follows: the crime provided for in Article 190 of the Criminal Code is a form of theft, whereas the crime provided for in Article 217 of the Criminal Code is not theft.

A specific feature of the objective elements of the crime provided for in Part 1 of Article 217 of the Criminal Code is that the socially dangerous act is expressed only in two actions — the creation and management of a financial pyramid.

The commission of actions involving intentional participation (performing an executive function) in the activities of a financial pyramid together with its creator (organizer) or manager, including attracting funds from depositors (victims), carrying out cash transactions, maintaining accounting records, etc., is not covered by the concepts of “creation of a financial pyramid,” “organization of the activities of a financial pyramid” or “management of the activities of a financial pyramid.” This circumstance indicates a gap in the legislation.

Consequently, if the actions of persons performing executive functions in a financial pyramid (that is, the intentional actions of participants in a financial pyramid) cannot be qualified under Article 217 of the Criminal Code, they are qualified under subparagraph 1) of Part 2 of Article 190 of the Criminal Code as fraud committed by a criminal group (depending on the form of complicity of the members of the financial pyramid).

Another characteristic feature of the objective elements of the creation and management of a financial pyramid (Article 217 of the Criminal Code), distinguishing this act from fraud, is that damage is caused not to one victim but to several victims (at least two). This is indicated by the wording of the disposition of Part 1 of Article 217 of the Criminal Code: “through the redistribution of these assets and the enrichment of some participants at the expense of the contributions of others.” As practice demonstrates, the activities of a financial pyramid cause damage to a large number of victims (that is, mass infliction of material damage). Fraud may also involve only one victim.

The difference between the crimes under consideration in terms of their objective elements also lies in the moment of completion of the crime. Fraud is considered completed from the moment the perpetrator takes possession of another person's property and obtains the opportunity to dispose of it in practice (the elements of the crime are material in nature, that is, material damage to the victim is considered to have been caused by the time the crime is completed). The elements of the crime of creating a financial (investment) pyramid (Article 217 of the Criminal Code) are formal in nature (the crime is considered completed from the moment the financial (investment) pyramid is created).

The act provided for in Part 1 of Article 190 of the Criminal Code is classified as a minor offense.

The act provided for in Part 2 of Article 190 of the Criminal Code is classified as a medium-gravity offense.

The acts provided for in Parts 3 and 4 of Article 190 of the Criminal Code are classified as serious offenses.

Commentary of 2021 to the Criminal Code of the Republic of Kazakhstan by Isidor Shamilovich Borchashvili, Honored Figure of Kazakhstan, Doctor of Law, Professor, Academician of the National Academy of Natural Sciences of Kazakhstan, member of the Scientific Advisory Councils under the Constitutional Council of the Republic of Kazakhstan and the Supreme Court of the Republic of Kazakhstan, member of the working group on reform of the law enforcement system under the Security Council of the Republic of Kazakhstan, Honored Worker of the Ministry of Internal Affairs of the Republic of Kazakhstan.

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