EPPO

At the request of the European Public Prosecutor’s Office (EPPO) in Milan (Italy), the Italian Financial Police (Guardia di Finanza) have arrested the suspected ringleader of a complex tax fraud involving the sale of cosmetics. Over €3.6 million is being seized, pursuant to an order by the judge for preliminary investigations of the Court of Rome.

Simultaneous investigative measures have also been carried out in Austria, Bulgaria, Czechia, Lithuania, the Netherlands, Romania and Slovakia.

On the radar of the EPPO is a company based in Rome, operating in the wholesale perfume and cosmetics sector. It is understood that this company is part of a fraudulent scheme to evade the payment of VAT, using a network of shell companies and fictitious tax credits, as well as forged invoices for business transactions that did not actually take place. 

The investigative activities also indicate that the company unlawfully accessed substantial loans, backed by public guarantees provided by EU funds designed to support small and medium-sized enterprises (SMEs), which were granted by several credit institutions upon the submission of falsified documentation. Such conduct allowed the suspect to obtain unjust profits, part of which is understood to have been laundered in Azerbaijan, Switzerland and the United Arab Emirates – siphoning off resources from the company, to the detriment of creditors, which led to the company’s bankruptcy.

It is estimated that the illicit activities of the criminal organisation caused a loss of over €2 million to the EU and national budgets in unpaid VAT, and the loss of an additional €1.6 million due to the fraudulent obtaining of EU-backed loans from the banks.

All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.

At the request of the European Public Prosecutor’s Office (EPPO) in Rome and Turin (Italy), the Italian Financial Police (Guardia di Finanza) of Rome are currently arresting eleven suspects and seizing assets worth up to €25 million, in an investigation into a VAT fraud involving the sale of electronic goods.

According to the evidence, the suspects – a group of entrepreneurs and accountants – formed a criminal organisation and employed a variety of fraudulent tactics in order to carry out the scheme. These are understood to have included the issuance of fake invoices for non-existent goods and fictitious transactions via foreign-based companies, acting as so-called missing traders – shell companies established for the sole purpose of evading the payment of VAT. It is alleged that this allowed them to sell electronic products at artificially low prices, undercutting legitimate competitors and resulting in VAT losses to the EU and national budgets exceeding €25 million.

The investigation also revealed evidence of self-money laundering – a form of money laundering in which the same person perpetrates both the primary offence and the money laundering offence. It is believed that a portion of the allegedly fraudulent proceeds was first transferred to an additional company, which in turn transferred the money to the suspects’ bank accounts abroad.

The eleven suspects will be placed under house arrest and five of the eleven face twelve-month bans from holding managerial positions in companies and other entities. 

All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.

Investigation ‘Greasy Hands’, led by the European Public Prosecutor’s Office (EPPO) in Turin (Italy), is targeting a criminal organisation alleged to have imported vehicle lubricants to the Italian market while systematically evading VAT, causing a loss of over €15 million.

Searches and judicial measures were executed today by the Italian Financial Police (Guardia di Finanza) in the provinces of Bari, Campobasso, Foggia, Matera and the regions of Rome, Trieste and Turin. Simultaneously, investigative measures were also carried out in Latvia. Judicial measures have been taken against 14 individuals, including the suspected ringleaders. Eight of the suspects will remain in pre-trial detention, and six have been placed under house arrest. 

Over 470 tonnes of lubricating oil were seized during the searches, which involved cash dogs – canine units specialised in searching for currency. A freezing order of €15.4 million is also being executed against the suspects. 

At the heart of the fraudulent scheme, according to the investigation, is a criminal association formed of individuals operating in Italy, as well as in Belgium, Czechia, Estonia, Hungary, Poland, Slovakia and Slovenia, who introduced and marketed large quantities of lubricating oils for cars and trucks, intended for consumers in the Italian market. Based on the evidence, the criminal organisation used multiple strategies to evade VAT and the payment of excise duties, including forged transportation documents and a network of shell companies.

The criminal group is also suspected of counterfeiting motor oil brands and laundering the illicit profits.

The investigation additionally indicates that a company operating in the Matera area, which is one of the main hubs for the sale of vehicle lubricants in central and southern Italy, also sourced oil from the criminal association, concealing over €52 million in profits from the tax authorities.

It is estimated that the illicit activities of the criminal organisation caused a loss of €14 million in unpaid VAT and over €1 million in excise duties, during the 2017–2023 period.

All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.

At the request of the European Public Prosecutor’s Office (EPPO) in Rome (Italy), the Italian Financial Police (Guardia di Finanza) of Bari is carrying out searches today, in an investigation into an €8.8 million fraud in the training sector. 

The searches are being conducted at the home of two suspects living in Bari and at the premises of several companies. 

At issue is an investigation into fraud related to training activities carried out by a number of training institutions, with the financial support of the EU. One of the suspects is the manager of several private training institutions, and the other one is his sister, who works as a teacher at the institutions.

Between 2019 to 2022, the suspects received public funds under the Youth Guarantee Programme, to the amount of €8.8 million, aimed at combatting unemployment and ensuring the integration of young people into employment. However, based on the evidence, the majority of the training courses did not take place. 

The suspects are being investigated for aggravated fraud to obtain public funds, as well as the issuing of invoices for non-existent transactions.

Given the extraordinary public interest in its investigation code-named ‘Resilient Crime’, the European Public Prosecutor’s Office (EPPO) wishes to clarify some technical elements that have been subject to misinterpretation: 

Last week, 4 April 2024, the EPPO informed about arrests and freezing order related to investigation ‘Resilient Crime’ targeting a criminal organisation alleged to have set up a sophisticated fraudulent scheme with damage to both the EU and Italian budgets. 

According to this EPPO investigation, the suspects involved in this scheme managed to obtain €600 million worth of tax credits from the Italian authorities, by providing false information and forged documents and invoices. Tax credits, that could potentially also be funded by the RRF, are a tax incentive that allows the beneficiary to deduct the amount of the credit they have accrued from the total they owe the state in their future tax declarations. 

It is understood, based on the evidence gathered so far in our investigation, that the suspects also directly applied for funding from the Italian National Recovery and Resilience Plan (NRRP) –  part of the EU’s Recovery and Resilience Facility (RRF) for Italy and the main pillar of the NextGenerationEU recovery plan.

The ‘Resilient Crime’ investigation does not concern €600 million worth of RRF funds, but a highly complex fraudulent scheme, also targeting RRF funds, with estimated total potential damages of more than €600 million to both the Italian and EU budgets.

Further information will follow in due course, once the investigation has reached a phase in which more details can be released.