When Can Investment Fundraising in Vietnam Be Considered Fraud?

Are you raising capital, investing, or entering a business partnership in Vietnam and starting to feel uneasy about legal risks? Could what appears to be a normal civil transaction be interpreted as criminal fraud by the authorities?

In reality, the line between legitimate investment activities and criminal liability is far thinner than many expect. If not identified early, the consequences can be serious. This article will help you understand the risks and how to proactively protect yourself.

When Can Fundraising Be Considered Fraud?

In practice, many foreigners come to Vietnam with genuine intentions to invest or cooperate in business. However, a significant number later find themselves being summoned by the police or even prosecuted for “fraudulent appropriation of property” under Article 174 of the 2015 Penal Code (as amended in 2017).

The key concern is this:
The boundary between civil transactions / legitimate investment and criminal fraud can be extremely blurred.

How Is “Fraud” Defined Under Vietnamese Law?

Under current law, an act may be considered fraud if all of the following elements are present:

• Deceptive conduct (providing false information or concealing material facts)

• Causing another person to trust and transfer assets

• Having the intention to appropriate assets from the outset

The most critical factor is subjective intent:

• If there was intent to appropriate assets from the beginning → potential criminal liability

• If it is merely business failure or inability to repay → typically a civil matter

However, proving “initial intent” during an investigation is complex — and this creates significant risk, especially for foreign investors.

Common Situations That May Be Misinterpreted as Fraud

1. Raising funds for projects without clear legal status

• No investment license

• Incomplete land procedures

• No official approvals

Yet capital is still raised with profit commitments

If investors believe they were misled, the case may escalate into a criminal matter.

2. Promising “overly attractive” returns

• Fixed returns (e.g., 20–30% per year)

• Guaranteed capital recovery

• Lack of risk disclosure

This may be viewed as deceptive tactics to attract investment.

3. Misuse of funds

• Raising funds for Project A but using them for personal purposes

• Redirecting funds without disclosure

• Lack of transparency

This is a key factor that may lead authorities to conclude there was intent to appropriate assets.

4. Continuing to raise funds despite inability to repay

• Financial distress already exists

• Awareness of inability to fulfill commitments

• Still soliciting new investors

This is a highly risky situation from a criminal law perspective.

How Can Foreigners Avoid Criminal Risks?

If you are a foreign investor or business operator in Vietnam, risk control is essential.

Ensure legal transparency from the beginning

• Proper licensing

• Clear contracts with risk clauses

• Avoid overstating profitability

Transparency is your strongest legal protection.

Avoid guaranteed return commitments

• Fixed returns may be considered suspicious

• Especially without a solid financial basis

Instead, present:

• Forecasts

• Risk analysis

• Financial scenarios

Maintain strict financial management

• Separate personal and company accounts

• Keep clear documentation

• Provide regular investor reports

These serve as crucial evidence in case of disputes.

Engage a lawyer early

Many clients approach DEDICA only after:

• Being summoned by authorities

• Facing fraud allegations

• Having bank accounts frozen

At that stage, legal handling becomes significantly more difficult.

With early legal support, you can:

• Structure fundraising properly

• Ensure compliance

• Identify risks in advance

What Should You Do If You Are Under Investigation?

Avoid these mistakes:

• Providing statements without legal advice

• Signing documents you do not fully understand

• Attempting informal settlements

Take immediate action:

• Contact a lawyer experienced in criminal and investment law

• Gather all contracts and documents

• Record all transaction history

The goal is not to “avoid responsibility” but to protect your legal rights.

Important Disclaimer

Every case is different.

No lawyer can guarantee the outcome of a criminal case.

However, having the right legal strategy early can:

• Minimize risks

• Protect your rights

• Prevent critical mistakes

DEDICA – Legal Partner for Foreigners in Vietnam

DEDICA is a law firm based in Ho Chi Minh City, with lawyers experienced in international law firms and multinational corporations.

We have assisted clients in:

• Criminal investigations involving fraud allegations

• Investment disputes in Vietnam

• Representing victims in criminal cases

Our services include:

• Working with investigation authorities

• Building defense strategies

• Protecting clients’ legal rights

Are you facing a similar situation?
Are you or your loved ones under investigation in Vietnam?

Contact DEDICA Law for tailored legal advice.

📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat, Zalo)
🕒 Working hours: Monday – Friday (8:30 – 18:00)