On June 7, 2023, the District Court of Debrecen announced a verdict in the case of the 27 defendants who misled nearly 2,000 victims living in difficult financial circumstances.
The trial series started in April 2017, during which the district court held more than 300 trial days. In the nearly 150,000-page file, the court recognized the testimony of exactly 1,907 victims.
The court found the first defendant guilty of nearly 1,700 counts of fraud, and in his case the value of the crime exceeded HUF 250,000,000.
The court sentenced six defendants – the first, second, third, fourth, fifteenth and twenty-seventh – to imprisonment. Among them, the first accused was sentenced to 3 years and 4 months in prison. The court fined seven defendants – the eighth, twelfth, seventeenth, nineteenth, twentieth, twenty-fourth and twenty-sixth orders – while five defendants were partially reprimanded, partially placed on probation, and the others suspended he was sentenced to imprisonment.
During the accused period, three companies operated as organizers of consumer groups in Budapest, which were founded in 2011 and 2012. The managing director of two of them was the first-rate defendant.
Several companies acted as agents of the companies acting as organizers, among which the second-, third-, fourth-, fifth-, sixth- and seventh-order defendants acting on behalf of the companies, based on their orders, appeared in the printed press, especially in one of the newspapers with national coverage, as well as in its regional editions printed ads were published with the text “Choose another solution instead of a loan, do the math!”.
In the ad, a table with the amount that can be claimed, with a breakdown of repayment installments according to the term, and that only 3.92% per year for a 10-year term and only 2.81% per year for a 15-year term will be charged. In addition, it was stated in the ad that the service can be used by pensioners and BAR members.
Additional advertisements promoting the consumer group were also published, including the words “Choose another solution instead of banks! It’s not a lottery system!” or “The safety net for everyone!” expression. In these cases, too, the amount of the obtainable sums, as well as the related repayment details broken down by term, were highlighted in the advertisements in tabular form. The ads also included in general that the service can be used by BAR listers, private individuals without age limit, for home renovation, car, business development.
In relation to the advertisements, it was established that their target group is primarily the financially vulnerable consumer group, which for some objective reason cannot use a bank loan or other financial product.
Based on the advertising and information practices accepted in everyday life through the display of the amounts that can be claimed, the durations, and the monthly details, the consumer could come to the conclusion as a result of the overall effect of the advertisement that the organizer of the consumer group or its representative offers a financial service and that the advertised service in case of use, the consumer can immediately get access to the requested amount, which he then pays back in monthly installments. The above circumstances were established during the investigation of the Economic Competition Office, on the basis of which the Economic Competition Office condemned the four limited liability companies acting as organizers in the case for alleged violations of the prohibition of unfair commercial practices towards consumers.
The companies operated local offices in Békéscsabá, Budapest, Daba, Debrecen, Dunaújváros, Esztergom, Győr, Gyöngyös, Hódmezővásárhely, Jászberény, Nagykőrös, Nyíregyháza, Miskolc, Szolnok, Szekszárd, Tatabánya, Veszprém and Zalaegerszeg.
As detailed above, based on the advertisements they had seen in the print media, the victims contacted the organizing companies and business agents acting on the authority of the organizing companies on the phone numbers indicated there, who then provided a few words of information, and after that the customers who required more information personal negotiations were held with businessmen.
Based on the advertisements, interested victims have already developed the misconception that they can get cash in a short time with favorable costs and long-term repayment. The victims who applied urgently needed money, so their participation in the transaction was motivated by this circumstance. In the course of informing the victims, it was stated in several cases by the shopkeepers that the alternative financial solution as a service means entry into the consumer group.
The shopkeepers deliberately failed to inform the victims that they could not get cash at all, that they could only acquire a right of purchase that could be used for a specified purpose, and that there were only limited opportunities to obtain this right of purchase. amount – even if in the form of a buyer’s right – may only be available after 10-15 or 20 years at the end of the term.
In several cases, information contrary to the provisions of the contract was given by the businessmen, when the victims were encouraged by the fact that they could get the amount of money they requested within a month or two, or within a short period of time.
The victims paid the first monthly installment and part of the commission fee to the account numbers of the organizing companies, while the amount of the registration fee was paid into the bank account of the company acting as the organizer’s agent. It was only after paying the sums of money that the victims returned to the local office and were able to sign the contract documents prepared by the clerk in the meantime. The victims then signed a contract to participate in a consumer group.
The contract created and validated in this way was only then sent to the victims by post, by which time the victims had already lost the possibility of unilaterally withdrawing from the contract within 30 days. It is also necessary to emphasize that, despite their obligation to do so, the listed executives of the companies operating as organizers did not form a separate fund from the paid repayment installments, but rather all payments were handled uniformly in the same bank account of the given company, from which the executives used sums of money for various purposes as they pleased, which, on the one hand, encompassed the costs related to the operation of the described system, wage payments, advertising costs and other amounts of money borrowed for private purposes that cannot be precisely determined.
The amount claimed by the victims was more than 2.5 billion.
There was no realistic possibility that the sums claimed by the victims would even be paid as compensation for the right to purchase.
The defendants all received financial compensation from the amount received from the victims, however, in order to ensure their regular livelihood and income, as well as the income of the business companies, they misled the consumers and the customers applying on the basis of misleading advertising.
The court assessed as aggravating circumstances, in particular, the proliferation of crimes against property, the accomplice and continuous perpetration, and the persistent intent to defraud spanning several companies for nearly two years, which can be considered serial. At the same time, he took into account as a mitigating circumstance the passage of time that has passed since the acts were committed, which exceeds twice the statute of limitations, as well as the fact that the damage has been partially repaid, the majority of the accused had no criminal record at the time of the act and have not committed a crime since then,
The prosecution took note of the judgment of the District Court in Debrecen in relation to all the accused. Six defendants also took note of the court’s decision, so the verdict is final in their case. Some defendants exercised their right of appeal, while the deadline for appeals has not yet expired for others.
(Court of Debrecen)
