Tens of millions of yuan in operational loans were issued illegally! The bank manager argued "no loss," so why was he still convicted?

“‘Prosecutors Entering Financial Street’ series of legal publicity and education activities includes specialized discussions aimed at professional financial institutions, as well as precise legal services deep in communities and streets. The types of activities cover on-site inquiries and answers, specialized lectures, and case-based legal explanations. Since June 2025, the Beijing Procuratorate has organized more than 20 related activities in conjunction with the Beijing Financial Street Service Bureau and other units, covering over 150 financial institutions, more than ten thousand financial practitioners, and tens of thousands of financial consumers,” said Chen Yutong, deputy director of the Economic Crime Prosecution Department of the Beijing Municipal Procuratorate.

This series of legal education activities also specifically organized an observation of court sessions focused on the collusion between bank credit personnel and illegal loan intermediaries, embezzlement, and the illegal issuance of loans. “This case has significant legal education value. We collaborated with the court to invite personnel from several financial institutions to participate in the public court session. Through case analysis and educational hearings, many financial practitioners clarified the legal risks and professional bottom lines associated with cooperating with intermediaries, correcting the misconception that ‘if no credit loss occurred, it does not constitute a crime,’ effectively helping practitioners strengthen their ideological defenses against corruption,” Chen Yutong stated.

On June 2025, the Beijing Municipal Procuratorate and the Beijing Financial Street Service Bureau jointly held the launch ceremony of the “Prosecutors Entering Financial Street” series of activities and the seminar on “Punishment of Financial Crimes and Risk Prevention.”

Embezzlement Unveils a “Case Within a Case”

Mo, a mortgage department manager at a certain bank, aimed to expand customer sources and improve loan business efficiency by paying a certain percentage of service fees to third-party loan intermediaries who recommended loan clients. Thus, Mo devised a scheme for higher profits.

In 2021, Mo and Liu agreed to embezzle the bank’s loan service fees through a “dummy order” method. Who is Liu? He was a former colleague of Mo at the bank, and after resigning in 2019, he started a company engaged in loan consulting. They agreed that Mo would recommend Liu’s company, which he actually controlled, to be included in the bank’s list of cooperating third-party loan intermediaries, and then Mo would fabricate loan clients he directly served as clients recommended by Liu’s company. This way, Mo’s clients were listed under Liu’s company, causing the bank to pay the service fees that should not have been paid, which Liu would then transfer to Mo.

From 2021 to 2023, they used the aforementioned methods to collectively embezzle over 1.68 million yuan in bank service fees. The essence of this behavior is that Mo and Liu conspired to illegally occupy the funds of the unit using the convenience of Mo’s position as the mortgage department manager, suspected of embezzlement. The public security bureau discovered this criminal clue while investigating related illegal loan intermediaries together with financial regulatory departments and captured Mo and Liu on May 17, 2024.

On February 12, 2025, prosecutors organized and analyzed the clues related to Mo’s illegal issuance of loans, clarifying the direction of the investigation.

On November 20, 2024, the Chaoyang Branch of the Beijing Municipal Public Security Bureau transferred the case to the Chaoyang District Procuratorate for review and prosecution. During the review, the prosecuting attorney found that Mo was not only in collusion with Liu but also had close ties with other illegal loan intermediaries, with frequent financial transactions, indicating potential collusion in illegal loan issuance.

“According to relevant credit management regulations, bank credit personnel must conduct strict reviews of the borrower’s loan purposes, repayment ability, repayment methods, etc., when processing loans, implementing a separation of approval and a hierarchical approval system. When conducting due diligence, credit staff must comprehensively review loan materials and guarantees according to regulations. Violating these regulations to issue loans, especially in large amounts or causing significant losses, may constitute the crime of illegal loan issuance,” said Wang Ai Qiang, a prosecutor from the Second Prosecution Department of the Chaoyang District Procuratorate. He added that the procuratorial authority guided the public security bureau to timely adjust the direction of the investigation, focusing on the illegal loan issuance process by Mo and Liu, and conducted additional investigations at banks jointly with the public security bureau, ultimately confirming that Mo committed illegal loan issuance when applying for a loan for client Ma.

Illegal Issuance of Ten Million Yuan Business Loan

According to relevant regulations, applying for business loans from banks requires meeting a series of conditions, mainly involving the borrower’s qualifications, operating status, financial status, loan purposes, and guarantee measures. For instance, in terms of legal operational qualifications, borrowers must hold a business license and relevant industry permits to ensure lawful and compliant operations; concerning profitability and repayment ability, enterprises must have certain profitability and stable cash flow to ensure timely repayment of loan principal and interest, typically requiring banks to review the enterprise’s financial statements for further assessment.

However, Mo, in order to meet his work performance, manipulated the process and illegally issued a huge business loan to Ma, who did not meet the loan conditions.

Ma urgently needed 10 million yuan for turnover and found Mo through an intermediary to apply for a high-limit business loan. As Ma did not have a company, to help Ma “solve the problem” while also completing his performance, Mo acquired a “shell company” that met the loan application conditions for over 15,000 yuan, then sold it to Ma for 28,000 yuan and assisted him in completing the business registration change, enabling Ma to meet the basic conditions for applying for a business loan. Subsequently, Mo had Liu provide Ma with false purchase and sales contracts, false financial statements, and other materials in accordance with the bank’s loan requirements, fabricating the need for a loan for the company to pay its cooperating party. Aware that the loan materials were forged, Mo used his position to directly sign and submit them, bypassing necessary loan investigation procedures, ultimately helping Ma obtain a 10 million yuan business loan from the bank.

Why is there still suspicion of illegal loan issuance despite no credit loss occurring?

The crime of illegal loan issuance is defined in Article 186 of the Criminal Law, referring to the behavior of bank or other financial institution staff who violate national regulations to issue loans, in large amounts or causing significant losses.

After being apprehended, Mo argued that the loans issued had sufficient collateral and did not cause credit fund losses. If no credit losses occurred, did she violate the crime of illegal loan issuance?

The prosecuting attorney found upon review that Ma, the loan applicant, did not have a business entity that met the conditions for applying for a business loan. According to the regulations of the bank where Mo worked, Ma could only apply for a credit loan, with a limit of 1 million yuan. To help Ma obtain 10 million yuan in loans, Mo conspired with Liu to entirely “manage” the loan approval process, exceeding both the loan type and amount regulations. Furthermore, after the loan was issued, Mo controlled the flow of the loan funds, even introducing a “third-party entrusted payment” intermediary to provide services for transferring funds from public accounts to private accounts, returning the loan paid by the bank to Ma, circumventing bank supervision of loan funds.

Prosecutors analyzed that Mo’s actions of illegal loan issuance violated relevant regulations of the Commercial Bank Law, undermining financial regulatory policies, interfering with the execution of national credit policies, and causing credit funds that should support enterprise production and operation to flow into other areas. At the same time, over ten million yuan of credit funds flowed outside of supervision and were illegally controlled by loan intermediaries, jeopardizing the safety of credit funds. Although the loans involved have been repaid and did not cause direct economic losses to the bank, the act of illegal loan issuance itself disrupted the financial management order, posing serious social harm.

According to the “Provisions on the Standards for Criminal Cases Under Jurisdiction of Public Security Organs for Investigation and Prosecution” by the Supreme People’s Procuratorate and the Ministry of Public Security, the prosecution standard for illegal loan issuance is set at a loan amount of over 2 million yuan or directly causing economic losses of over 500,000 yuan. The amount of Mo’s illegal loan issuance was 10 million yuan, which met the prosecution standard; therefore, the procuratorial authority prosecuted her for illegal loan issuance.

After the prosecuting attorney presented evidence and explained the law, Mo and Liu ultimately truthfully confessed to their criminal facts and voluntarily signed a confession and plea agreement. On May 9, 2025, the Chaoyang District Procuratorate prosecuted Mo and Liu for suspected embezzlement and illegal loan issuance.

Strengthening the Responsibility of Financial Safety Defense is Crucial

On September 5, 2025, the Chaoyang District Court of Beijing publicly heard the case of Mo and Liu’s embezzlement and illegal loan issuance, with personnel from multiple financial institutions invited to observe the trial.

“The defendants placed industry ‘hidden rules’ above national law, failing to correctly view their financial power, turning their positional convenience into tools for personal gain. Under the temptation of profit, they gradually lost themselves, abandoned their bottom lines, betraying the professional ethics of financial practitioners.” On September 5, 2025, the Chaoyang District Court held a public trial of the case, during which both Mo and Liu shed tears of regret under the prosecutor’s courtroom education.

After the trial, participating bank staff expressed: “Through the trial, we recognized the seriousness of such issues and will strengthen education and learning in the future, strictly adhere to legal boundaries, and not be swayed by personal interests.” Many financial practitioners who were invited to the courtroom also lamented, stating they would learn from this case, enhance their understanding, and engage in clean practices.

On September 26, 2025, the Chaoyang District Court fully adopted the facts and sentencing recommendations put forth by the procuratorial authority, determining that the actions of defendants Mo and Liu constituted both embezzlement and illegal loan issuance. Mo was sentenced to three years and six months in prison and fined 120,000 yuan; Liu was sentenced to one year and eleven months in prison and fined 60,000 yuan. The judgment has taken effect.

This case not only warns banking personnel to conduct related financial businesses in accordance with laws and regulations but also alerts borrowers to understand that obtaining loans through illegal intermediaries and other informal channels poses significant financial and legal risks. “According to credit management regulations, financial regulatory authorities and banks will conduct post-loan management of credit funds. After personal loans are disbursed, banks will track and monitor the use of loan funds, the credit of borrowers, and guarantee situations according to regulations to ensure the safety of loan funds. If borrowers misuse loan funds, measures such as requiring early repayment or adjusting loan risk classifications may be taken,” reminded Hu Jing, deputy procurator general of the Chaoyang District Procuratorate. She added that the public should be wary of illegal loan assistance agencies’ false advertising using internal channels, as illegal loans may carry risks of banks stopping loan disbursements or requiring early repayments, and loans should be obtained through formal channels to protect one’s legal rights.

“The credit funds from banks play a crucial role in social and economic development. A sound credit order can enhance the resilience and safety of the financial system, stimulating economic vitality and the motivation of business entities.” Liu Jing, director of the Economic Crime Prosecution Department of the Beijing Municipal Procuratorate, stated that the procuratorial authority will work with relevant parties to strengthen the financial safety defense line and ensure a clear ecosystem in the financial credit field.

Source: Procuratorial Daily Justice Network