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Swiss Courts Uphold Decision to Refuse Criminal Investigation into Fraudulent Activities

Geneva Court Denies Appeals

In a recent judgment, the Court of Justice of Geneva has denied appeals from several investors against a no-contents order issued by the Public Prosecutor’s Office of the Canton of Geneva. The decision effectively refuses to open a criminal investigation into allegations of fraud by a group of companies based in Switzerland.

Allegations of Fraud

The investors had accused the company and its representatives of fraudulent activities, including the sale of unregistered securities and the use of deceptive marketing tactics. However, the court found that while the company’s promotional strategies may have been aggressive, they did not constitute fraud.

Definition of Fraud

According to Article 146 of the Swiss Penal Code, a person commits fraud if they intentionally induce an erroneous belief in another person through false pretenses or concealment of the truth, with the aim of unlawfully enriching themselves or others. The court found that the company’s actions did not meet this definition of fraud, as there was no evidence of malicious intent.

Investor Responsibility

The court also noted that the investors had failed to exercise elementary caution and verify the information provided by the company. The company’s promotional materials were deemed to be part of a legitimate marketing campaign, rather than fraudulent activity.

Implications for Investors

This decision highlights the challenges associated with pursuing criminal charges for fraud in Switzerland. The court explicitly stated that criminal law is not intended to shield individuals engaging in naive behavior, but rather assumes that investors should exercise caution and diligence when making financial decisions.

Civil Remedies

The outcome also underscores the importance of civil remedies for investors who have fallen victim to fraudulent activities. Swiss law offers various legal grounds to address civil fraud cases, including claims for restitution and damages. However, these options come with constraints such as short limitation periods and the absence of pre-trial discovery in Swiss civil procedure.

Seeking Support from Criminal Authorities

In this case, seeking support from the criminal authorities remains a crucial tool for establishing facts and gathering evidence, which can facilitate the implementation of an asset recovery strategy through alternative means, including the pursuit of civil claims for restitution.