Op-Ed | Rising Panic Over the Failure to Curb Fraud: Stop Trying to Cure Baldness with Lion's Mane

An ETtoday report on January 29 titled "Anti-Fraud Failure Turns Taiwan Into a Fraud Island! Taiwan Lags Behind in This Key Area Compared to Japan, South Korea, and China" pointed out that fraud crimes in Taiwan have hit a peak in recent years in terms of both the number of cases and financial losses. Citing police statements, the report attributed this to "the court handling matters too leniently during trials; the indictment rate for those selling bankbooks or providing dummy accounts at the prosecutors' offices is less than 20%, and the indictment rate for money mules is less than 60%." The report also noted that stricter laws or heavier court judgments in places like Japan, South Korea, and China are areas where Taiwan's governance of fraud cases falls short.

Admittedly, with fraud crimes frequently occurring in Taiwan in recent years, the government is eager to find solutions. However, is blaming "lenient sentencing by the courts" the right direction? This article argues that it is open to debate.

Japan's Judicial Adjudication and Enforcement Practices for Fraud Offenders Are Not Stricter Than Taiwan's

First, regarding the general prosecution profile of fraud offenders in Japanese judicial practice in recent years, according to the White Paper on Crime published annually by Japan's Ministry of Justice, the indictment rate for fraud offenders has been around 50% in recent years (page 432 of the 2021 edition of the White Paper on Crime). Although the aforementioned white paper does not specify whether the fraud offenders referred to are account providers, money mules, or syndicate leaders, based on the fact that most apprehensions in Taiwan and Japan currently involve money mules and account providers, the indictment rates for fraud offenders in both places should not differ significantly.

Furthermore, according to the aforementioned White Paper on Crime, sentences handed down by Japanese judicial practice for the crime of fraud generally fall between 1 and 3 years (page 43 of the 2022 edition of the White Paper on Crime). It is worth noting that while the Japanese Penal Code does distinguish between general fraud and organized fraud (Article 3, Paragraph 1, Item 13 of the Act on Punishment of Organized Crimes and Control of Crime Proceeds, which is similar to our Organized Crime Prevention Act), the data above already encompasses both. Therefore, in terms of sentencing severity, Japanese judicial practice certainly does not impose 7 to 15 years as mentioned in the report.

As for the 20-year sentence handed down by a Tokyo court judge to the mastermind of a fraud syndicate mentioned in the report, while such a case does exist, it must be understood that this is truly an exception among exceptions and cannot be used as a routine judgment, let alone have any deterrent or rehabilitative effect. After all, apprehending the head of a criminal syndicate is already rare—otherwise, why would it make the news? Moreover, the head of a criminal syndicate is obviously distinct from the money mules (the absolute bottom tier of a fraud syndicate) or account providers (most of whom are not syndicate members at all) discussed in the report.

Furthermore, regarding Japanese criminal execution practice, the probation rate for fraud is approximately 50% (page 432 of the 2021 White Paper on Crime), and the Japanese Penal Code has no special provisions prohibiting parole or bail for fraud offenses. In fact, since 2010 (Heisei 22), the parole rate for the crime of fraud has continued to increase, and the parole rate for fraud is higher than that for other crimes (page 432 of the 2021 White Paper on Crime).

The Difficulty of Trial Lies in Balancing the Two Scales of Justice

Fraud cases in Taiwan are indeed numerous, but it is probably unfair to attribute this to low indictment rates by our prosecutors or overly lenient sentencing by judges.

As a criminal defense attorney handling such fraud cases, the most common type of defendant I encounter is involved in so-called "fraud assistance," namely those who provide bank accounts. Defendants of this type are often not members of the fraud syndicate; most of them had their accounts exploited by fraud syndicates due to looking for work, applying for loans, or even accidentally losing their bankbooks. Admittedly, we can easily blame such individuals for treating their financial information so carelessly. However, we should equally not ignore the fact that these so-called "fraud accessories" are also highly likely to be victims themselves. Once identified as aiding fraud, aside from criminal liability, they must also compensate the victims of the fraud (even if the stolen fraud funds merely passed through their accounts and the account provider did not gain a single penny). If judgments mandate that these people must go to prison and face severe punishment, one must ask: how are they supposed to earn money to compensate the victims? Is it fair to defendants who are highly likely to be victims themselves (albeit careless with their information)?

As for the situation of fraud money mules, although it is more serious than that of account providers (a point also reflected in the sentencing length), they are not far apart. A so-called fraud syndicate money mule refers to the person in the syndicate responsible for withdrawing the stolen fraud funds and handing them over to the higher-ups. Because money mules are the most easily exposed (caught on surveillance cameras), they tend to be the lowest existence in a fraud syndicate. Many are not even permanent members of the syndicate, but merely temporary odd-job workers recruited on the spot, and some do not even get paid in the end. Most money mules are under 25 years old, and some are even juveniles under 18. Their economic status is truly a far cry from the scenario described in the report of "living it up abroad." Therefore, if heavy sentences are stubbornly demanded, not only will it similarly fail to help compensate the victims, but it can hardly be called proportional to the crime.

A few years ago, there was a quite interesting commercial illustrating that people should not risk plucking the majestic mane of a lion to cure baldness simply because of "subjective perception" or "folklore" without any verification. The very purpose of that commercial was to urge people to stop believing in bizarre folk remedies and instead seek more scientific and rational ways to achieve their goals.

The same goes for the governance of fraud crimes. There are many reasons for the rampant spread of fraud, such as poor bank regulation, the difficulty in tracing the flow of funds, the inability to trace fraud syndicates back to their origins, and the failure to pursue higher-ups. Compared to blaming the judicial system, these are the homework assignments that administrative agencies need to complete. In fact, based on my experience dealing with clients in criminal litigation practice over the past few years, whether defendants care about their own prison sentences comes quite late in the game. When asked after being sentenced whether they regret it, most do express regret. Yet, when asked why they still engaged in criminal behavior, the usual answer is merely "forced by money" or "I didn't think that much." Therefore, hoping that heavy sentences can deter this kind of crime is truly nothing more than climbing a tree to catch fish. As for related authoritarian myths like "using severe punishments in chaotic times," let them remain in the past, and stop believing in unfounded claims!

This article was published on February 2, 2023, in ETtoday