When Can Investment Capital Raising in Vietnam Be Considered Fraud?

In recent years, Vietnam has become an attractive destination for foreign investment. However, alongside opportunities, capital raising activities also carry significant legal risks. Many investors find themselves being summoned or investigated without understanding why a seemingly legitimate transaction could be viewed as “fraudulent appropriation of property.”

In reality, the line between lawful fundraising and criminal conduct can be extremely thin—especially for foreigners unfamiliar with Vietnam’s legal system.

When Is Capital Raising Considered Fraud Under Vietnamese Law?

Not all failed investment activities constitute a criminal offense. However, in certain circumstances, such conduct may be examined under “fraudulent appropriation of property” pursuant to Article 174 of the 2015 Penal Code (amended in 2017).

Many foreign investors only realize this risk when they are already under investigation.

Deception – The Core Element of Criminal Liability

The key legal element is the use of deceptive means to appropriate property.

In practice, the following acts may be considered deceptive:

• Providing false information about a project (scale, profits, licenses, etc.)

• Falsifying legal documents or company status

• Promising unrealistic or guaranteed returns

• Concealing critical information that misleads investors

Intent to Misappropriate – The Decisive Factor

Not every incorrect statement leads to criminal liability. Authorities also assess whether there was intent to appropriate assets.

Indicators may include:

• Receiving funds but failing to implement the project

• Using funds for unrelated personal purposes

• Continuing fundraising despite inability to repay

• Disappearing or cutting communication after receiving funds

This is particularly risky for foreigners due to:

• Difficulty explaining financial flows without proper accounting

• Differences in business culture (verbal promises vs. legal evidence)

Legal Solutions and Risk Prevention

If you are being summoned or investigated, the key is not avoidance, but understanding your legal position and acting strategically.

Civil Dispute vs. Criminal Liability

• Civil dispute: A legitimate business relationship exists but fails commercially

• Criminal liability: Deception exists from the outset or funds are misused

However, the boundary is often unclear and depends on:

• Evidence evaluation

• Statements of involved parties

• Financial records

Many clients say:

“I thought it was just a failed business, but now I’m under criminal investigation.”

What You Should Do Immediately

1. Do not make statements without a lawyer

2. Prepare all documents and evidence

3. Clarify the use of funds

4. Develop a legal strategy early

Role of Lawyers

Lawyers can:

• Assess legal risks

• Work with authorities

• Protect your rights

• Propose appropriate legal solutions

DEDICA Law has experience assisting:

• Foreigners accused due to misunderstanding Vietnamese law

• Investors involved due to partner violations

• Victims in investment fraud cases

Important Disclaimer

Each case depends on specific facts, evidence, and authority assessment. This article is for reference only and does not replace formal legal advice.

Are You Facing a Similar Situation?

Don’t let uncertainty put you at risk.

👉 Contact DEDICA Law for tailored legal strategy.

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