EPPO

At the request of the European Public Prosecutor’s Office (EPPO) in Venice (Italy), a freezing order of over €2.8 million, issued by the judge for preliminary investigations of the Court of Treviso, was executed today against four people suspected of fraud involving EU agricultural funding aimed at supporting young farmers. 

Money, real estate and funds received from the Italian Agricultural Payments Agency (AGEA) and financed by the Common Agricultural Policy (CAP) were seized by the Carabinieri Agri-food Protection Department of Parma (Reparto Carabinieri per la Tutela Agroalimentare di Parma). A personal precautionary measure was executed against the main suspect, who is not allowed to leave his municipality.

According to the investigation, the fraudulent activity involved setting up farms in the name of individuals who did not meet the necessary criteria to apply for agricultural subsidies for young farmers. It is believed that they then transferred the ownership of the farms to younger individuals, in order to apply for subsidies, falsely claiming eligibility for agricultural funds without proper authorisation. 

Based on the evidence, the suspects also took advantage of higher payments intended for young farmers. It is alleged that this elaborate scheme aimed to maximise financial gain by obtaining large mountainous lands and exaggerating the size of livestock populations beyond reality, to be able to receive higher amounts in subsidies.

Between 2017 and 2022, the suspects obtained over €2.8 million in EU subsidies funded by the European Agricultural Fund for Rural Development (EAFRD) and the European Agricultural Guarantee Fund (EAGF), managed by several regional Italian payment agencies. 

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

 In an investigation into textile smuggling led by the European Public Prosecutor’s Office (EPPO) in Bologna (Italy), the Italian Financial Police (Guardia di Finanza) of Prato have seized 2.4 million metres of illegally imported fabric, with an estimated value of €3 million.

Law enforcement officers have seized rolls of fabric found in the warehouse of a company in the district of Prato, which is under investigation for smuggling textiles from China, while evading the payment of custom duties and VAT. The company’s bank account, which holds €34 000, has also been frozen. 

The goods were stored in the warehouse before being sold on the domestic market. Based on the evidence, the company used forged invoices and transport documents from fake suppliers in France, Germany, Hungary and Slovakia, in order to conceal the actual origin of the shipments – thus evading the payment of custom duties and VAT, by selling the goods on the black market. 

According to the investigation, the scheme allowed the suspects to sell the textiles at low prices, hence obtaining an unlawful advantage over honest economic operators. 

The investigation also made it possible to identify the suspected actual manager of the company, which operated under a figurehead, who had been officially named as its legal representative. 

The rolls of fabric seized by judicial order will be sold at a public auction, and the proceeds will be confiscated in case of a final conviction, 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 Milan (Italy), one individual has been placed under house arrest, and charged with a €41.8 million VAT fraud and the misappropriation of €6.7 million in public funds, among other offences. 

The defendant, an entrepreneur operating in the wholesale trade of computer equipment and broadcasting technology, is alleged to have committed intra-community VAT ‘carousel’ fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value added tax – as well as money laundering, bankruptcy fraud and serious fraud against the financial interests of the EU. 

According to the investigation, the VAT carousel fraud took place between 2016 and 2020, and was committed by the defendant, via two companies owned and operated by him. One company was active in the wholesale trade of computer equipment, and the other, in the broadcasting communication sector. It is understood that this fraud was conducted via a chain of missing traders – shell companies established for the sole purpose of evading the payment of VAT – and buffer companies, which serve to hide fraud from the authorities. This scheme, which involved the use of invoices for non-existent transactions, is believed to have caused an estimated damage of €41.8 million, and to have led to unfair competition in the computer industry. 

The investigation also revealed grounds to suspect money laundering. It is understood that a portion of the proceeds of the alleged tax evasion – which had been ostensibly justified by what were, in reality, non-existent transactions – was transferred to a third company based in the Cayman Islands which, based on the evidence, was owned and operated by the defendant. 

Simultaneous efforts focused on alleged fraudulent activity by the defendant, in relation to public funding. One of the companies subject to the VAT fraud investigation received, between 2018 and 2022, €6.7 million in financial support for small and medium-sized enterprises – for which a public guarantee of €5.8 million had been provided. The majority of this funding was granted by the EU, for companies that had suffered financial damage during the Covid-19 pandemic. 

It is understood, however, that the defendant, in order to receive such forms of financial support, produced documentation that falsely represented the company’s economic, asset-based and financial reality. This is alleged to have included, for the purpose of obtaining the financing, the implementation of a non-existent business project in Albania, with the fictitious establishment of a company for the sale of VoIP (Voice over Intranet Protocol) equipment. According to the investigations, this false presentation of the investment plan was based on completely unreliable corporate balance sheets that showed a thriving business, without any reference to its significant exposure to the tax authorities and the erosion of its capital. An analysis of the flow of accounts uncovered evidence of a method of stealing publicly guaranteed contributions, which were systemically diverted within 24 hours of being obtained, and ended up in corporate accounts or those of other corporate entities, both in Italy and abroad, which were specifically created for this purpose. 

A joint investigation team, composed of the Italian Financial Police (Guardia di Finanza – Nucleo PEF di Novara), which investigated the alleged VAT fraud and money laundering, and the EPPO Investigative Unit of the Arma dei Carabinieri in Milan, which investigated the alleged fraud to public finances, executed the house arrest warrant, issued by the judge for preliminary investigations at the Court of Novara.

The judge also issued a freezing order at the request of the EPPO, carried out by the Guardia di Finanza, of up to the amount of €41.8 million – the alleged profits of the VAT fraud and money laundering. 

In the context of a large-scale investigation led by the European Public Prosecutor’s Office (EPPO) in Palermo (Italy), several searches, arrests and seizures took place between Saturday and Monday, in a probe into an alleged criminal association suspected of aggravated VAT fraud involving beverages and EU funding fraud. 

The Italian Financial Police (Guardia di Finanza) of Catania, with support from units across Italy, executed precautionary measures against 10 suspects. These measures included arrest warrants for ten individuals, with five detained in custody and four placed under house arrest. One suspect is still at large. One of the five individuals in custody is the suspected leader of the criminal organisation, and is the son of a member of the ‘Santapaola’ mafia clan – one of the biggest Italian mafia families – who is currently in prison, under a special regime reserved for mafia association. A further 17 suspects were subjected to restrictive measures, prohibiting them from engaging in business activities or holding managerial positions for one year. 

During the searches, police seized bank accounts, 98 units of real estate, 20 cars, jewellery and luxury watches – all identified as proceeds of the criminal activity. 

The focus of the investigation is a suspected transnational criminal association active in beverage trading. According to the evidence, the suspects employed a variety of fraudulent tactics, including 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 products at artificially low prices, undercutting legitimate competitors, resulting in VAT losses exceeding €30 million.

In addition, the suspects simulated the organisation of training courses, co-funded by the EU, for employees of various affiliated companies within the criminal group. These actions also aimed to illegitimately claim tax credits for organising the courses, which never took place.

The crimes under investigation include VAT fraud, aggravated EU funding fraud and money laundering, as well as fraudulent bankruptcy.

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), five individuals were arrested on 23 February, on suspicion of orchestrating a €220 million VAT fraud involving alcohol exports to several Member States. A freezing order was also executed at the EPPO’s request by the Italian Financial Police (Guardia di Finanza) of Milan, targeting bank accounts, real estate and luxury cars.

The judge for preliminary investigations of the Court of Milan ordered the pre-trial detention of three of the suspects, understood to be the ringleaders of the scheme – all Italian citizens living in Dubai and Monaco. In addition, the two other suspects will remain under house arrest. A sixth suspect – an Italian entrepreneur in the alcoholic beverages sector, convicted of corruption in the past, and also suspected of bribing a police officer in this investigation – has been prohibited from leaving his place of residence. Earlier in this investigation, the police officer was convicted of receiving a bribe of €50 000, with the purpose of softening or excluding the responsibilities of one of the suspects in this investigation, and those of some of his family members. 

Criminal organisation involving 12 countries 

The investigation uncovered a highly skilled white collar criminal organisation suspected of using false invoices to evade the payment of taxes for exporting large quantities of alcoholic beverages, using an intra-community VAT ‘carousel’ fraud – a complex 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).

The scheme under investigation involved the simulated trade of the same goods between commercial operators based in Italy and elsewhere in Europe, using a widespread network of companies located in Belgium, Bulgaria, Czechia, France, Hungary, the Netherlands, Portugal, Romania, Slovakia, Spain and the United Kingdom. It is understood that the chain included missing traders located in Italy and in those countries, as well as buffer companies. In reality, based on the evidence, the majority of the exports were actually destined for the Italian market. According to the investigation, at least 43 companies were involved in the fraud, as well as 17 individuals, including sales agents, consultants and accounting and logistics managers.

Based on the evidence, the scheme generated, between 2015 and 2021, a turnover of over €850 million, resulting in tax evasion and illicit profits of €220 million. 

The offences under investigation include cross-border criminal association, VAT fraud, forgery of commercial operations and money laundering. The operational model of the EPPO as a single office makes it possible to detect cross-border criminal networks, but also to obtain evidence much faster and in a far more comprehensive manner than under the usual judicial cooperation modalities.

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