EPPO

An investigation by the European Public Prosecutor’s Office (EPPO) in Bologna (Italy), code-named ‘Stop the Carousel’, has led to the arrest of three suspected ringleaders of a criminal organisation created to obtain funds from the Recovery and Resilience Facility (RRF).   

Based on the evidence, the suspects created companies or took over inactive ones, in order to fraudulently apply for RRF funds. The companies did not have physical offices and had not submitted the required tax returns, some for more than 20 years. 

It is alleged that the suspects created, with the help of an accountant, a paper trail showing revenues in the millions, by registering false financial statements online at Italy’s Company Register (Registro Imprese). They then submitted a series of requests for funding, ostensibly to internationalise the companies, develop e-commerce or to enter foreign markets. These requests – some of which involved in part non-repayable funds – were submitted to SIMEST, Italy’s financial institution for the development and promotion of the activities of Italian companies, and responsible for managing and distributing RRF funds. 

The suspects obtained an initial payment of approximately €490 000 of funding, and this money was immediately diverted from the companies’ bank accounts, through systematic cash withdrawals from ATMs, or bank transfers to the accounts of other individuals or companies. It is understood that the suspects expected this ‘carousel’ of ‘letterbox companies’ to produce millions in illicit revenues.

The investigation uncovered at least 15 instances of aggravated fraud to obtain public funds (both committed and attempted), involving requests for public funding amounting to €15 million, mostly from letterbox companies in the provinces of Ravenna and Bolzano. The timeliness of this investigation prevented the disbursement of up to €15 million worth of EU funds by SIMEST.

In addition to the three suspects arrested, a fourth individual, suspected of producing false balance sheets, was suspended from the exercise of the profession of certified accountant. These coercive measures, issued by the judge for preliminary investigations of the Court of Pesaro, were executed by the Italian Financial Police (Guardia di Finanza) of Pesaro. 

Law enforcement agents also carried out searches in the province of Salerno, at the suspects’ homes and offices, using ‘cash dogs’ – canine units specialised in searching for currency – and seized assets of the suspects worth €490 000, in order to compensate the damage to the EU budget. 

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 Bologna (Italy), a freezing order of over €6.8 million, issued by the judge for preliminary investigations of the Court of Bologna, was executed last week (6 June) against four individuals and one company suspected of VAT fraud relating to the illegal importation of fabric from China.

The Italian Financial Police (Guardia di Finanza) of Bologna executed the freezing order and managed to freeze over €620 000 on the bank accounts of the suspects. In addition, over €27 000 in cash have been found and seized during the searches by the Italian Financial Police, with the support of cash dogs.  

As previously reported, the investigation targets eight individuals and seven companies suspected of evading VAT on the import of over 13 600 tonnes of textiles, worth around €63 million, from China into the EU. The suspects, including owners and managers of customs shipping companies in Prato and Bologna and Chinese entrepreneurs, are suspected of smuggling, forgery, and issuing fake invoices. Despite declaring the imports, they failed to move goods to tax warehouses, allowing immediate release without paying VAT. This scheme caused an estimated VAT loss of over €13 million, leading to the freezing of assets worth €7.3 million in April this year.

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 Palermo (Italy), a freezing order of over €190 000 was executed last week (5 June 2024) against a farmer suspected of misappropriation of EU agricultural funds. Real estate, equivalent to the value of the estimated damage, has been seized.

According to the evidence, the suspect successfully applied for over €190 000 in EU agricultural funds between 2017 and 2021, by falsely declaring ownership and possession of land in the Sicilian provinces of Messina and Syracuse. It is understood that, in this manner, he misled the Italian Agricultural Payments Agency (Agenzia per le erogazioni in agricoltura – AGEA), defrauding over €190 000. The investigation also revealed that the land parcels were actually owned by unaware individuals, or designated for ‘pasture grazing’ – which does not qualify for EU agricultural funds.

At the request of the EPPO, the judge for preliminary investigations of the Court of Patti issued a freezing order of assets for the sums unduly received, which was executed by the Italian Financial Police in Capo d’Orlando (Tenenza di Capo d’Orlando della Guardia di Finanza). 

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 Milan (Italy), the Italian Financial Police (Guardia di Finanza) have arrested a third suspect in an ongoing investigation into a large VAT fraud scheme, with estimated damage of approximately €50 million. 

Earlier in this investigation, two individuals were already arrested, on suspicion of being the primary organisers of a VAT ‘carousel’ fraud – a criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value-added tax (VAT). Further investigative measures allowed for the identification of a third suspect.

Based on the evidence, the three are the main ringleaders of a complex network through which companies, established in several EU countries, sold over 3 million AirPods, electronic devices and hard drives to numerous shell companies in Italy, administered by figureheads, in order to evade the payment of VAT. 

According to the investigation, the goods were sold, under-priced, to these shell companies, making it more difficult to identify the scheme and its perpetrators, while also increasing the illicit profits. Ultimately, the commodities were sold to regular Italian companies at very competitive prices, as well as to other companies in the EU, allowing for massive evasion of VAT. 

The judge for preliminary investigations of the Tribunal of Busto Arsizio issued an order for the pre-trial detention of the third suspect, based in the province of Cesena. It is understood that he acted as an intermediary between the Italian companies and the companies abroad, as well as with the end-customers of the goods. 

At the time of the arrest, searches were carried out using ‘cash dogs’ – canine units specialised in searching for currency. Law enforcement officers seized two Rolex watches, as well as numerous smartphones and computers, believed to have been used in the fraudulent scheme. During the searches, three rifles were also found and seized, and the weapons permit of the suspect was revoked.

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), seven individuals were arrested today in Italy, on suspicion of orchestrating an €18 million VAT fraud involving the trade of alcoholic and non-alcoholic beverages. The Italian Financial Police (Guardia di Finanza) of Rome and Foggia also executed a freezing order, at the EPPO’s request, targeting bank accounts, real estate and other assets.

The judge for preliminary investigations of the Court of Foggia has ordered the pre-trial detention of three of the suspects, while the  other suspects will remain under house arrest. All are suspected of participation in a criminal organisation, VAT fraud and self-money laundering – which involves the same individuals committing both the primary fraud and the subsequent laundering of the illicit proceeds.

The focus of the investigation is a suspected criminal organisation, active in beverage trading and with headquarters in Foggia. According to the evidence, the suspects employed a variety of fraudulent tactics, including the issuance of fake invoices for non-existent goods and the conducting of fictitious transactions, via Italian and Bulgarian companies, which acted as so-called missing traders – shell companies established for the sole purpose of evading the payment of VAT. Like this, the beverages appeared to pass through Bulgaria, but in fact were distributed directly in Italy without ever passing through Bulgaria. This allowed them to sell products at artificially low prices, undercutting legitimate competitors and resulting in VAT losses amounting to €18 million.

Among the Italian companies involved in this investigation are some important distributors who invoice millions of euro every year.

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