CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 7 février 2012

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margin-left:17pt; margin-bottom:12pt; text-indent:-17pt; text-align:justify } .s48DB3670 { margin-top:12pt; margin-bottom:36pt; text-indent:14.2pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid } .s69DCC830 { margin-top:36pt; margin-bottom:0pt } .sF8DCB537 { width:16.53pt; display:inline-block } .s25347E17 { width:182.43pt; display:inline-block } .s7602FED2 { width:18.21pt; display:inline-block } .sC1AC44A4 { width:228.11pt; display:inline-block } .s7C281E20 { margin-top:0pt; margin-bottom:12pt; text-align:justify } .s9138CF0B { margin-top:36pt; margin-bottom:36pt; text-align:right } .s5E1364CA { margin-top:0pt; margin-bottom:12pt; text-align:center; page-break-inside:avoid; page-break-after:avoid; font-size:14pt } .sC800182F { font-family:Arial; color:#0000ff } .sF6A12959 { width:33%; height:1px; text-align:left } .s85226119 { margin-top:0pt; margin-bottom:0pt; text-align:justify; font-size:10pt }     FOURTH SECTION           CASE OF ALIMUÇAJ v. ALBANIA   (Application no. 20134/05)               JUDGMENT     STRASBOURG   7 February 2012     FINAL   09/07/2012     This judgment has become final under Article 44 § 2 (c) of the Convention. It may be subject to editorial revision. In the case of Alimuçaj v. Albania, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:   Nicolas Bratza, President,   Lech Garlicki,   Ljiljana Mijović,   Ján Šikuta,   Päivi Hirvelä,   George Nicolaou,   Vincent A. De Gaetano, judges, and Lawrence Early, Section Registrar, Having deliberated in private on 20 September 2011 and 17 January 2012, Delivers the following judgment, which was adopted on the last mentioned date: PROCEDURE 1.     The case originated in an application (no. 20134/05) against the Republic of Albania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Albanian national, Mr Vehbi Alimucaj (“the applicant”), on 2 June 2005. 2.     The applicant was represented by Mr Sh. Dizdari, a lawyer practising in Tirana. The Albanian Government (“the Government”) were represented by their then Agent, Mrs E. Hajro of the State Advocate’s Office. 3.     The applicant alleged that there had been a breach of Articles 2 and 3 of the Convention on account of the failure to provide him with adequate medical treatment. He contended that his pre-trial detention had been in breach of Article 5 §§ 1 and 3 of the Convention. He further complained under Article 6 § 1 that the proceedings had been unfair and that there had been a breach of Article 7 of the Convention. 4.     On 7 December 2009 the President of the Fourth Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article   29 § 1). 5.     The applicant and the Government each filed written observations (Rule 59 § 1). 6.     Mr Ledi Bianku, the judge elected in respect of Albania, withdrew from sitting in the case (Rule 28 of the Rules of Court). The President of the Section accordingly appointed Mr Jan Sikuta to sit as an ad hoc judge (Rule   29 § 1(b)). THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 7.     The applicant was born in 1949 in Vlora, Albania. A.     Compulsory administration proceedings concerning the applicant’s company 8.     The applicant was the owner and the sole shareholder of Vefa Holding sh.p.k., a company initially founded as a trading company on 28   August 1992 (“the company”). Further to the expansion of its scope of activity, the company changed its registered names three times, to be finally registered on 3 February 1997 as “Vefa Holding sh.p.k.” Its expansion need and a shortage of lending opportunities from the commercial banks in the country led the applicant and his company to take loans from individuals, beginning on an unspecified date in 1994. The loan agreements were concluded under Article 1050 of the Civil Code. 9.     The process of taking loans continued until 1997 and was rolled out across the country. During this time, the authorities had not sought to intervene in order to control or stop the process. Furthermore, the company complied with the payment of taxes and levies to the competent tax authorities. 10.     In 1997 Albania was hit by civil unrest owing to the collapse of the alleged pyramid schemes which had been established during the preceding years. Consequently, the State intervened and passed legislation. 11.     On 23 January 1997 the Pyramid Schemes Prohibition Act (“Act no.   1”) was enacted (see “Relevant domestic law and practice” below). On 9   May 1997 the Non-Banking Entities Audit Act was passed. The company was made subject to the new legislation and administrators were appointed by the Government. 12.     On 30 July 1997 the Non-Banking Entities Audit Act was amended (“Act no. 2”). Section 3 of Act no. 2 precluded the criminal prosecution of persons connected with non-banking entities until the conclusion of the compulsory administration proceedings. At the relevant time, no list of persons connected with non-banking entities had been adopted by the Government. A list was adopted only on 21 January 1999 and the applicant’s name did not appear on it. 13.     The administration process was to be conducted in two phases. During the first phase the administrators would assume full control of the company. An inventory of the company’s assets would be compiled and a plan of action would be prepared for the recovery of the assets. An audit would be conducted by qualified auditors to be appointed by the Government. During the second phase the administrators would proceed with the sale of the company’s assets and assist in the redistribution process to its creditors. It would further prepare a final report for the Government and close the proceedings. 14.     On 28 January 2005 the Government, following the sale of the company’s assets, adopted a decision on the redistribution of financial assets to the applicant company’s creditors, on the basis of a coefficient. The proceeds collected from the sale of assets totalled 3,800,000,000 Albanian leks (“ALL”), approximately 37,383,200 United States Dollars (“USD”) at the relevant time. The outstanding debt of the company remained at ALL 34,361,781,170, approximately USD 338,040,000 at the relevant time. 15.     In a letter of 29 March 2010 the administrators informed the State Advocate’s Office that the total number of creditors was 73,509, of whom 57,742 had benefited from the redistribution process. To date, the process is ongoing for the remaining creditors. 16.     A detailed description of the facts concerning the compulsory administration proceedings can be found in the case of Vefa Holding Sh.p.k. and Alimuçaj v. Albania (dec.), no. 24096/05, 14 June 2011. B.     The applicant’s initial detention on remand 17.     On 12 April 1998 the administrators requested that the applicant be criminally prosecuted for deception. On 28 April 1998 the prosecutor charged the applicant with deception ( mashtrim ), committed in collusion with others, and ordered his pre-trial detention. The applicant was arrested on the same day. 18.     On 29 April 1998 the prosecutor requested the validation of the applicant’s detention for an unlimited period. On 30 April 1998 the lawfulness of the applicant’s arrest was confirmed by the Tirana District Court (“the District Court”). While the court found that the charges were based on a reasonable suspicion that the applicant had committed an offence, it stated that the material evidence submitted was not compelling (... Gjykata, pasi u njoh me materialet e çështjes, çmon se akuza e prokurorit bazohet në një dyshim të arsyeshëm, por provat e paraqitura nuk janë bindëse ) and ordered the applicant’s detention for a period of fifteen days only. 19.     On 2 May 1998 the prosecutor appealed against the District Court’s decision, contesting the duration of the detention order and contending that there existed sufficient evidence to justify the applicant’s detention for an indefinite period. On 3 May 1998, the applicant lodged an appeal directly with the then Court of Cassation, alleging that his arrest had not been based on conclusive evidence (“the first appeal”). He also contended that he could not be prosecuted on the basis of section 3 of Act no. 2. 20.     On 13 May 1998 the Tirana Court of Appeal (“the Court of Appeal”) upheld the prosecutor’s appeal and ordered the applicant’s indefinite detention. No copy of the decision was submitted to this Court. On an unspecified date the applicant appealed that decision to the Court of Cassation (“the second appeal”). 21.     On 20 May 1998 section 3 of Act no. 2 was further amended to allow the criminal prosecution and trial of persons connected with non-banking entities (“Act no. 3”). It precluded the commencement of civil proceedings. 22.     On 1 June 1998 the Court of Cassation declared the applicant’s second appeal inadmissible as the grounds of appeal fell outside the scope of Article 432 of the Code of Criminal Procedure (“the CCP”). 23.     As the Court of Cassation had not examined the applicant’s first appeal of 3 May 1998, on an unspecified date the applicant requested information about its outcome from the Court of Cassation. On 13 July 1998 the Court of Cassation dismissed the first appeal on the ground that the applicant’s case had acquired the force of res judicata in the light of its decision of 1 June 1998. The applicant complained of the bench’s lack of impartiality, as the same judges had examined his first and second appeals on 1 June and 13 July respectively. His request was rejected by the Court of Cassation. 24.     On an unspecified date the applicant appealed to the Constitutional Court. He complained that his arrest had been contrary to section 3 of Act no. 2. Moreover, he contended that his first appeal to the Court of Cassation had been examined after the expiry of the ten-day time-limit prescribed by law. He did not raise any issue as to the Court of Cassation’s lack of impartiality. 25.     On 9 March 1999 the Constitutional Court dismissed the applicant’s appeal. It found that the Court of Cassation had stayed the examination of the applicant’s first appeal until the Court of Appeal had decided on the prosecutor’s appeal. The first appeal had been examined after the completion of those proceedings and the matter had been found to constitute res judicata. Insofar as his complaint relied on section 3 of Act no. 2, the Constitutional Court found that “... the provision [section 3] ... is more characteristic of an administrative order than a criminal procedural provision. As such, it is in violation of constitutional provisions as it constitutes interference by the legislature with the judiciary, impinging upon the latter’s independence. The non-institution of a criminal prosecution while the compulsory administration proceedings were ongoing, stripped the prosecutor’s office of its constitutional duty to protect the general interests of society, the legal order and citizens’ rights and, in so far as particular cases were concerned, [section 3] rendered the judiciary dependent on the executive branch of power. Faced with such a provision, the prosecutor’s office decided to respect constitutional obligations by sidestepping the said provision’s requirements” (...   neni 3 ... ka patur më shumë karakterin e një urdhërimi administrativ se sa të një norme procedurale penale. Duke patur këtë natyrë, ajo ka qenë në kundërshtim me dispozitat kushtetuese sepse ishte ndërhyrje e pushtetit legjislativ në atë gjyqësor, duke cënuar pavarësinë e këtij të fundit. Mosfillimi i proceseve penale për aq kohë sa do të vazhdonte kontrolli i firmave piramidale i hiqnin mundësinë organeve të prokurorisë të zbatonin detyrat kushtetuese të mbrojtjes së interesave të përgjithshme të shoqërisë, të rendit juridik dhe të të drejtave të shtetasve dhe, për çështje konkrete, e bënin të ndërvarur pushtetin gjyqësor nga ai ekzekutiv. Duke qenë para një dispozitë të tillë, prokuroria ka pranuar të respektojë detyrimet kushtetuese, duke mënjanuar urdhërimet e dispozitës në fjalë. ). 26.     A dissenting opinion of Judges H.D and Z.V stated that, unless and until section 3 of Act no. 2 was declared unconstitutional, that law precluded a criminal investigation and court proceedings against the applicant. C.     The applicant’s continued detention 27.     On an unspecified date following the Court of Cassation’s decision of 13   July 1998, the applicant sought a review of his detention order before the District Court. It appears that the request was not examined. 28.     On 28 July 1998 the prosecutor decided to extend the time-limit for completion of the criminal investigation by three months, until 28   October 1998. It does not appear that the extension of the time-limit was validated by the court. 29.     On 3 August 1998 the applicant complained that his detention was unfair, by letters sent to the President of the Republic, the Prosecutor General and the President of the Court of Cassation. 30.     On 8 October 1998 the applicant further complained that his detention was unfair, by letters to the Prosecutor General and the President of the District Court. He sought a review of his detention. 31.     On 28 October 1998 the prosecutor decided to extend the time-limit for completion of the criminal investigation by a further three months, until 28 January 1999. On the same day the District Court validated the prosecutor’s decision, but extended the time-limit until 23 November 1998 only. It reasoned that the need to verify voluminous information concerning the complex business activities of the applicant’s company constituted reasonable grounds for his detention. On 9 November 1998 an appeal by the applicant against the District Court’s decision was declared inadmissible by the Court of Cassation. 32.     On 10 November 1998 the applicant requested a review of his detention and his release from prison. 33.     On 16 November 1998 the applicant requested the prosecutor to conduct a number of investigative measures, including producing an accounting report on the financial situation of his company. On the same day, the prosecutor charged the applicant under Article 333 of the Criminal Code (“the CC”) with the additional new criminal offence of establishing a criminal organisation. It does not appear that the District Court confirmed new time-limits in respect of the second charge. 34.     On 27 November 1998 the District Court dismissed the applicant’s request of 10 November. Since the applicant had been charged with establishing a criminal organisation on 16 November 1998, a new period of twelve months of pre-trial detention had started to run from that date. 35.     On 2 December 1998 the applicant appealed directly to the Supreme Court, which had replaced the Court of Cassation after the Albanian Constitution’s entry into force on 28   November 1998. He stated that, since his company had been placed in compulsory administration, the need for his detention had diminished. He also referred to his state of health. On 18   February 1999 the Supreme Court dismissed his appeal as unfounded. 36.     On 27 January 1999 the prosecutor decided to extend the time-limit for completion of the criminal investigation by three months, until 28 April 1999. It does not appear that the District Court confirmed the new time-limit. The decision was communicated to the applicant on 17 February 1999. 37.     On 1 March 1999 the applicant requested that his detention order be reviewed. 38.     On 10 March 1999 the prosecutor decided to appoint three experts to prepare an accounting report. They were tasked with providing information on the following two points: (i) the total number of creditors of the applicant’s company; and (ii) the applicant’s company’s overall liabilities. The applicant requested that the experts also provide information on a number of other points, such as: the determination of the value of the company’s assets at the time it had been prohibited from taking loans; the determination of the amount of taxes and duties paid; the financial situation of the company at the time it was placed in compulsory administration; the determination of the company’s bank deposits; the determination of the amounts withdrawn and the company’s obligations towards third parties; and the proceeds resulting from the sale of the company’s assets. It would appear that all the applicant’s requests were rejected by the prosecutor. 39.     On 12 March 1999 the applicant complained to the Prosecutor General about the refusal of his requests. On 13 April 1999 the Prosecutor General replied that the applicant’s allegations were unfounded. 40.     On 21 April 1999 the experts submitted their report, according to which the number of creditors was 68,857 and the company’s total liabilities were ALL 32,060,884,036, the equivalent of USD 325,029,238. Their estimates were based on the information that had been previously deposited with and processed by the Board of Supervisors ( Grupi Mbikqyrës ). 41.     On 26 April 1999 the applicant was given access to all the documents collected during the criminal investigation and on 27 April 1999 he was committed to stand trial. 42.     On 27 April 1999 a bill of indictment was lodged with the District Court, according to which the applicant was accused of having committed the criminal offence of deception 68,857 times. D.     The applicant’s trial 1.     The District Court’s judgment of 31 May 2000 43.     At the hearing of 10 November 1999 two of the three experts declared that the report had been based on the evidence obtained by the Board of Supervisors. The experts had not, however, relied upon the report produced by the firm of auditors appointed by the Government on 24 June 1998, which had calculated the applicant’s company’s liabilities at USD   688,655,717. They had not been able to estimate the monetary value of the property owned by the applicant’s company or its ability to repay the outstanding debts, as this fell outside their terms of reference. In the calculation of the amount, the experts had deducted the capitalised interest. 44.     On 10 May 2000 the applicant requested the court to question the administrators F.A. and H.G. and to obtain the administrators’ report on the situation of his company. On 15 May 2000 the applicant again requested that the administrator N.A. be summoned to answer questions regarding the valuation of his company’s assets, the sale thereof and the conclusion of the compulsory administration proceedings. It is not clear what action was taken in response to his requests. 45.     On 29 May 2000 the applicant made his final submissions. He alleged that the institution of the criminal prosecution was in breach of section 3 of Act no. 2 and it should not have started before the conclusion of the compulsory administration proceedings. He complained that he had been held in pre-trial detention beyond a reasonable time. He also argued that he had been deprived of his liberty on the grounds of his inability to fulfil a contractual obligation, in breach of Article 27 § 3 of the Constitution. With regard to the experts’ financial report, he contended that no assessment of the value of his property had been made with a view to establishing whether the creditors could be repaid. Moreover, contrary to Article 270 of the CCP, the prosecutor had not proceeded to seize his property. 46.     In a detailed judgment of 31 May 2000 the District Court found the applicant guilty of deception and sentenced him to five years’ imprisonment. The court acquitted the applicant of the charge of establishing a criminal organisation. In fact, it acknowledged, that this charge had been brought in order to extend the applicant’s pre-trial detention, as the time-limit was coming to an end. 47.     The first ten pages of the judgment gave a detailed description of the establishment of the applicant’s company, its activities and its modus operandi . According to the District Court, the development and progress of the applicant’s company was made up of two phases. The first phase of the development extended from 1992 to 1994 during which time the economic and commercial activity of the company was concentrated in the sphere of fast-income businesses, relying on cash, such as bakeries, retail shops, cake shops, restaurants and travel agencies. The second phase extended from the end of 1994 until the placement of the company in administration. During this period, the goal of the company was to modernise its lines of production and extend its activities within the country and abroad. In the court’s view, this was the decisive period which gave rise to great economic and financial problems. The District Court acknowledged that the principal reason for the taking of loans from members of the public were the rapid pace of the company’s expansion and development as well as the actual impossibility for the Albanian banks to give loans. 48.     The judgment further stated that the process of taking loans from the public continued until 23 January 1997. Towards the end of 1994 and the beginning of 1995, the loan contracts consisted of a simple letter and offered interest rates between 5% and 6% per month. The total number of persons who concluded a loan contract with the company was 68,857 creditors. The total amount of loans taken, on the basis of calculations made by specialised bodies and experts, was equivalent to USD 325,300,000. This figure was not accurate since the final findings had not yet been drawn up. 49.     The ensuing twelve pages of the judgment focused on the financial situation of the applicant’s company. The court analysed the company’s balance sheets for the period from 1993 to 1996 on the basis of the company’s tax returns. It concluded that the balance sheets showed an unjustified inflation of the company’s assets in order to cover the excessive debts it had incurred through the taking of loans from members of the public. Furthermore, the court examined a number of transactions and expenses that had been incurred domestically and abroad by either the company or the applicant, with a view to pointing to their unlawful nature. 50.     In finding the applicant’s actions unlawful and the applicant guilty, the District Court stated as follows: “First, the applicant entered into loan agreements with individuals with a maturity period of 6 to 12 months. This is contrary to section 6 of the 1996 Banking System Act in Albania, which states that ‘no other entity, with the exception of a bank, may accept deposits from the public with an initial maturity period of 12 months or less’. Second, on concluding the loan agreements and accepting the loans, the applicant’s company offered creditors an advance payment of two per cent of their accrued interest, a somewhat strange action given the nature of the company as an investment entity. Third, the applicant carried out actions, notably the modification of the real values of the balance sheets for 1994, 1995 and 1996, in breach of the 1993 Accounting Act. Fourth, a number of transactions were made in cash, thus avoiding lawful entries in the accounting records ... Fifth, the interest rates offered by the applicant’s company, which varied from 6% to 8% per month, were staggering compared with the interest rates offered by [commercial] banks. Moreover, the applicant’s company carried out arbitrary, unilateral actions, even breaching its contractual obligations by decreasing the interest rate without the prior consent of creditors. Sixth, the contractual obligations vis-à-vis creditors were met by continuously attracting new loans from the public ... Seventh, the economic activity of the company is contrary to the 1992 Companies Act since the activity of taking loans under the Civil Code is allowed only between individuals. Checks reveal that there have been reported cases when loans were made to the applicant’s company. Eighth, the applicant and his company deliberately increased the value of their assets to obtain a positive balance sheet for the company ... Ninth, the applicant paid exorbitant prices, beyond the real market value, for the purchase of objects with a lower return rate compared to the speed and fast pace of the withdrawal of money. Tenth, the increase of unnecessary expenses for the purchase of luxury items and the high expenses for personnel costs did not correspond to the reality. ... Eleventh, during the commercial activities of the applicant and his company, there were cash transfers for the purchase of objects and property ... without any guarantee or interest rate, despite the fact that the money was taken from the public at an interest rate of eight per cent per month. In most cases these amounts do not appear in the company’s balance sheet. Twelfth, on the basis of balance sheets submitted by the company to the tax authorities in the years 1995-1997 ... the level of profits compared to the withdrawal of money from creditors was no more than four per cent. Questioned at a hearing, the experts concluded that, having regard to the profit made and the level of assets as assessed by the auditors, there could be no question of returning the principal amount, let alone paying interest. Thirteenth, during the operation of the company, notably following the adoption of the 1997 Pyramid Scheme Prohibition Act, there is a pattern of transfers of money by way of cash to different countries, particularly Switzerland, to allegedly buy shares, banks or set up new activities so that the company could allegedly explore ways for its continuation and survival. Fourteenth, the loan contracts were not concluded before the public notary in accordance with the [1992] Notary Act and the Civil Code; they are standardised contracts, with defined obligations ... concluded without seeking the creditor’s consent and without proprietary guarantees.” 51.     As regards the applicant’s claims concerning his detention, conviction and sentence arising out of his inability to fulfil his contractual obligations, the judgment read: “... the [district] court will not directly examine the contractual obligations. The applicant’s actions and failure to act, as well as his inability to fulfil his [contractual] civil obligations, amount to a criminal offence. More precisely, as a result of the unlawful actions carried out from the beginning [of the company’s business activities] until the actual trial, a number of legal provisions, as mentioned above, were sidestepped, breached or not observed (... gjykata në këtë rast nuk i futet detyrimit civil në mënyrë të drejtpërdrejtë por se me veprimet dhe mosveprimet e tij dhe mospërmbushjes së detyrimeve civile, ka lindur një vepër penale dhe konkretisht me anë të veprimeve të kundraligjshme që nga momenti i fillimit e deri në momentin aktual të gjykimit janë mënjanuar apo shkelur, apo lënë pa zbatuar një sërë dispozitash ligjore të cilat ne I pëmendëm më sipër ).   It must be emphasised that the taking of loans does not constitute an act engaging civil liability, since the [loan] agreements did not entail any monetary guarantee, the interest rates were beyond the prescribed legal ceiling and there was concealment of revenues and loss of property ( Duhet theksuar se veprimtaria e huamarrjes nuk është një veprim i drejtpërdrejtë civil pasi kontratat janë bërë pa garanci pasurore, niveli i interesave ka qenë tej normativave ligjore, kemi fshehje të të ardhurave dhe rrjedhje të pasurisë ).” 52.     The District Court rejected the prosecutor’s request to sentence the applicant on 68,857 counts, equal to the total number of creditors. It stated that the applicant had been charged with only one offence. The offence in question had started in 1994 and finished on 23 January 1997, thus constituting a continuing crime rather than a repeated one. The court held that Article 55 of the CC could not apply to the instant case as the applicant had committed only one criminal offence. The District Court had further regard to the then Court of Cassation’s decision of 14 July 1998, which had sentenced another individual only once, in accordance with Article 143 of the CC, on principally the same facts and circumstances as the applicant’s. 2.     The Court of Appeal judgment of 24 December 2001 53.     On an unspecified date in June 2000 the applicant and the prosecutor appealed. The applicant argued that he had been sentenced on account of his inability to fulfil a contractual obligation arising out of the loan agreements entered into with his creditors. However, no creditor had accused the applicant of deception. To this end, at least 40 creditors had been questioned by the court and had all declared that they had willingly lent money to the applicant and had withdrawn the interest on the date agreed upon in the agreement. The applicant contended that the Civil Code did not stipulate that a loan agreement could be concluded between two private individuals only. The applicant also contested the assessment of evidence by the District Court and its failure to examine whether he was capable of fulfilling his contractual obligations towards the creditors. 54.     On an unspecified date in May 2001 the Court of Appeal appointed the same three experts to produce another financial report. 55.     On 17 October 2001 the experts submitted their report. According to the report, the total number of creditors was 57,923 and the overall debt amounted to ALL 29,249,622,461, the equivalent of USD 199,045,000 at the material time. This figure was drawn from the company’s computers, which had been seized by the prosecutor’s office. Referring to the number of claims made by creditors after the start of the compulsory administration proceedings, the report indicated that the overall number of creditors was 38,652, while the total debt was USD   127,019,677. As regards the value of the applicant’s company’s assets, the report concluded that as of 27 June 1997 its assets totalled USD 336,563,915. This estimate was based on a decision of the District Court of 27 June 1997, which listed the company’s property and the corresponding monetary value. However, it did not include the value of mines and other mineral reserves. [1] Following the start of the compulsory administration proceedings, the total value of the applicant’s company assets amounted to USD 14,683,493, of which USD   8,675,975 consisted of the proceeds from the sale of assets and USD   6,007,513 was the estimated value of assets which had not yet been sold. As regards the cash flow in the company’s bank accounts, the report concluded that its balance was USD 11,533,063. However, not all banks had submitted cash flow reports. The outstanding debt owed by third parties to the applicant’s company was calculated to be USD 18,453,348. The report assessed the damage to the applicant’s company’s assets as a result of the 1997 civil unrest at USD 201 million. 56 .     In its judgment of 24 December 2001 the Court of Appeal relied on the facts established in the District Court’s judgment. It found the applicant to be responsible for the deception of 57,923 creditors in the total amount of ALL   29,249,622,461. The court explained the decrease in the overall number of creditors and the total amount of debt by the deduction of the capitalised interest and the exclusion of inaccurate records. The court further dismissed the figures resulting from the compulsory administration proceedings as being inaccurate, having regard to the fact that not all creditors might have shown up to submit their claims. 57.     The Court of Appeal sentenced the applicant to twenty years’ imprisonment in accordance with Article 143 § 2 of the CC, which had entered into force on 24 January 2001. 3.     The Supreme Court judgment of 22 November 2002 58.     On 22 January 2002 the applicant appealed. He complained about the retrospective application of Article 143 § 2 of the CC, which had aggravated his position. He alleged that the Court of Appeal had not given him time to prepare his defence when it had recharacterised the criminal offence and sentenced him under Article 143 § 2 of the CC. The applicant further maintained that none of his creditors had been questioned before the lower courts or complained about the contracts he had concluded with them. As regards the offence with which he was charged, he stated that he had invested all the money he had taken from the public. There had been no intention to lie or abuse trust on his part. This assertion was supported by the large number of assets that his company owned and managed. Lastly, the applicant alleged that the decrease in the value of his property had resulted from the mismanagement of the administrators and improper handling of the sale of his company’s assets. 59 .     On 22 November 2002 the Supreme Court found the applicant guilty as charged. Relying on the same facts as established in the lower courts’ decisions, the Supreme Court held that the applicant’s actions and the company’s activities had been improper and unlawful. The Supreme Court’s judgment, in so far as relevant, read as follows: “On the basis of the wealth of material, documents and experts’ reports which have been adduced before the trial and appeal courts, it is clear that the accused collected considerable amounts of money and foreign currency from members of the public by means of false promises to repay the amounts and pay high interest rates, knowing that he was incapable of keeping his promises. In contrast to the accused’s claims, the [lower] courts established that the taking of money from members of the public, in the form of so-called loans, was carried out for the sole purpose of acquiring property for the accused himself and other persons. The accused was not capable of securing the amounts in question relying solely on the money taken from members of the public and he knew that he could not obtain profits in a lawful manner in order to repay the loans. The undertaking to pay back the money collected from members of the public was not based on the company’s realisable profits, but on the prospect of attracting money in the same way from other members of the public. The [lower] courts established that no lawful and normal commercial company could secure the interest rates needed to cover the high rate of interest that the accused offered to persons from whom he had collected extraordinarily large sums of money. In augmenting untruthfully the value of investments he had made using the money taken from members of the public, the accused’s purpose was to attract a large number of persons in response to the competition from the so-called foundations and other pyramid schemes which were operating at the time, and to instil in the public the false idea that he possessed property and other assets which would underwrite the obligations he had entered into. The increase in interest rates for creditors and the shortening of deadlines for the repayment of loans fell into this same category. Regard being had to the whole body of evidence which was analysed in detail by the District Court and by the Court of Appeal, it emerges that, using money taken from members of the public, the accused created a pyramid scheme the base of which consisted of loans collected from members of the public who had been deceived, while its apex consisted of repayments which, as established by the courts, were not sufficient to fulfil the accused’s [contractual] obligations. ... It appears from the investigation and the case file that the criminal intent to commit theft by way of deception had its genesis in 1994, through the process of loan-taking. With the passage of time this intent evolved as the applicant expanded his activities, which took on staggering proportions as the scheme was rolled out across the country until 23 January 1997, the date that marked the end of his pyramid scheme. At its inception, the document used by the company for the taking of loans consisted of a simple letter or an order ( mandat ). The interest rates were between 5% and 6% per month. This corresponded to the period between the end of 1994 and the beginning of 1995. With the passage of time the documents were modified and took on more stereotypical form, containing the first name and surname of the lender, referred to as the creditor, and the name of the borrower, i.e. the accused. These documents, which were the same as those used in other pyramid schemes – the so-called foundations – were unilaterally and systematically used to lie to, deceive and abuse the trust of thousands and thousands of poor people who dreamed of earning money from the accused. In 1996 the accused concocted a refinement to the scheme, based on deception and lies, when he issued the so-called savings books ( librezë kursimi ), which were never put into use. In order to increase the trust of creditors and also make it easier to steal from and deceive them, the accused raised the interest rates to 8%, while applying higher interest rates to his closest circle [of acquaintances], who spread the word about the miracles performed by his company. ... It is obvious that Vefa, even though it expanded across the country and was made up of many subsidiaries, existed as a single financial and economic unit. Even the company’s balance sheets were submitted as a single balance sheet covering the whole company. More specifically, according to the 1993 balance sheet, the company had a net profit amounting to ALL 63,000 and a workforce of six people. According to the 1994 balance sheet, the company’s net profit was ALL 305,928, which was equal to 0.04% of the outstanding debt owed to its creditors. In 1995 there was an increase in the number of loans [made by members of the public]. Consequently, Vefa’s balance sheet reflected increased values. The company’s net profit for that year reached ALL 73,150,201, the equivalent of 0.02% of the outstanding debt owed to its creditors. By 1996 the process of loan-taking had assumed unprecedented proportions and, consequently, the company’s net profit totalled USD 2,125,882, the equivalent of 0.004% of the outstanding debt owed to its creditors. 60.     The Supreme Court upheld the findings of the Court of Appeal regarding the total number of creditors, namely 57,923. However, it concluded that the total amount of the applicant’s liabilities was ALL 22,374,141,130 (approximately USD 157,453,000 at the material time) after having deducted the company’s cash flows, which totalled ALL 6,875,481,331.   The Supreme Court’s judgment, in so far as relevant, read as follows: “... Any eventual change in the number of creditors does not affect the accused’s guilt or his sentence in respect of the offence he has committed. A final court decision in the criminal case is binding on the court examining civil liabilities only in so far as the commission of the criminal offence is concerned and if the offence was committed by the accused. It does not have any consequences for the resolution of civil proceedings that may be instituted in the future. During the investigation stage, as well as in the trial and appeal proceedings, the accused claimed that, since his actions vis-à-vis his creditors constituted civil relations in the form of fulfilment of a contractual obligation resulting from the loans taken, they could not give rise to criminal liability. This argument was dismissed by the domestic courts as unfounded. The accused also complained that no criminal offence had been committed, on the grounds that the property in his possession was far greater than the value of his liabilities vis-à-vis creditors. The [lower] courts, having assessed the evidence in their possession, concluded that this claim was unfounded. The perception of the accused among members of the public as the owner of huge assets was one of the forms of deception he employed to attract large amounts of money from citizens. The court notes that the [lower] courts drew this conclusion on the basis of voluminous documents, explanations provided by experts and the experts’ reports that were compiled. ... As regards the valuation of objects, their value does not reflect the reality, as the valuation was unilateral and was fictitiously increased compared to the purchase price and the real market value. The District Court reached the same finding via more detailed reasoning. In these circumstances, the [lower] courts accepted that the accused had committed the criminal offence of theft by way of lies and abuse of trust.” 61.     The Supreme Court held that the Court of Appeal had in