EPPO

At the request of the European Public Prosecutor’s Office (EPPO) in Milan (Italy), two people have been arrested by the Italian Financial Police (Guardia di Finanza) in an investigation into a large VAT fraud scheme, with estimated damage of approximately €50 million. The pre-trial detention of the two individuals was ordered by the judge for preliminary investigations of the Tribunal of Busto Arsizio.  

The investigation uncovered a complex network of companies, established in several EU countries, used to commit 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).

One of the primary suspects under investigation was based in Moldova, where he is thought to have managed a VAT carousel fraud based on the sales of over 3 million items – including wireless ear buds, electronics and hard drives – to numerous shell companies managed by strawmen in Italy.

According to the evidence, the goods were sold to companies in Italy below their market value and in multiple steps. The application of the lower price, by undercutting competitors, allowed the suspects to sell a large quantity of products, while the multiple steps involved made it more difficult to identify the scheme and its perpetrators. Overall, it is estimated that the suspects managed to evade the payment of €50 million in VAT.

The two individuals under investigation are understood to have been the primary managers of the entire scheme, and are long-standing friends. One suspect was already subject to previous personal precautionary measures for fraud and bankruptcy offences, and has been handed over to the German authorities to be arrested for acts committed on foreign territory. The other suspect was arrested on his return to Italy from Moldova.

During searches of the suspects’ homes, carried out at the time of the arrests, cash was found, as well as numerous smartphones used for home banking transactions relating to large daily transfers, and accounting and administrative documentation relating to the establishment of new companies useful for fraud.

The European Public Prosecutor’s Office (EPPO) in Palermo (Italy) has been conducting an investigation into organised criminal association, corruption and fraud involving agricultural funds in Sicily, which has now led to an indictment of 56 individuals and two companies.

In June 2022, the Italian Financial Police (Guardia di Finanza) in Palermo uncovered evidence of a web of organized criminal activities involving high-level public officials and industry professionals. This gave rise to serious suspicions of the existence of an organized criminal group, capable of steering decisions in order to allow private companies operating in the surroundings of Palermo to receive agricultural funding from EU and national sources, within the context of the EU’s European Regional Development Fund (ERDF).

As part of the investigation, 12 suspects were placed under house arrest, and 10 additional suspects were obliged to appear before the judicial police. Money and assets worth approximately €2.5 million were preventively seized, as previously reported.

Since then, the investigation has yielded crucial findings, strongly indicating the existence of an alleged criminal association involving a public official and members of a technical office in Marineo (Sicily, Italy). It is understood that this group exerted undue influence over the decision-making process of public officials from the Provincial Agriculture Inspectorate (IPA) of the Sicilian region, ensuring that their clients were granted a disproportionately high percentage of funding applications, resulting in significant financial gain for the members of the group.

According to the investigation, public officials from the IPA, which was responsible for evaluating the eligibility of funding requests, systematically favoured additional technical offices, including those of agronomists and engineers, during the processing and administrative phases of funding applications. This preference appears to have been cultivated through long-standing relationships.

The investigative materials suggest over 20 unlawfully granted funding applications, and two instances of alleged corruption involving public officials and private entrepreneurs. In addition, a range of offences against public order such as criminal association and against public administration, including abuse of office, disclosure of official secrets, material/ideological forgery in public documents, suppression, concealment, and destruction of public records, are alleged to have been committed by the public officials of the IPA in Palermo and the other members of the group in various role.

These allegations, supported by the decisions of the Palermo Court of Review, have been accepted by the Judge of the Preliminary Hearing in Termini Imerese, resulting in the indictment of all individuals suspected of involvement, in various capacities, in the illicit receipt of public contributions.

The trial is scheduled to commence before the Collegiate Court of Termini Imerese on 7 February 2024.

In a joint effort with the Italian Financial Police (Guardia di Finanza) in Orbetello (Italy), the European Public Prosecutor’s Office (EPPO) in Bologna has uncovered evidence of a deceptive scheme carried out by an agri-businessman to illicitly secure approximately €230 000 in EU funds.

According to the investigation, the agri-businessman leveraged the age of two employees and his daughter to establish two ostensibly new businesses, in order to fraudulently obtain funding from the European Regional Development Fund’s (ERDF) “Youth Package 2016”. It is understood that these two businesses were created exclusively to tap into the funds, thereby diverting them away from their intended purpose of supporting youth entrepreneurship. Instead, they were to be used to renew the businessman’s fleet of vehicles, including tractors and machinery used in his own economic activities.

Evidence of this scheme was uncovered following an initiative by the Guardia di Finanza, aimed at combatting fraud against both the EU and national budgets. It specifically targeted a company called Società Semplice Agricola, which was registered in the names of two Romanian citizens, who had applied for both EU and national subsidies designed to support young agricultural entrepreneurs.

Based on the investigative activities, it is alleged that the agri-businessman was the true owner of this newly established business entity, and that the involvement of the Romanian citizens – who were, in fact, employees of the businessman – was purely due to their age, which provided exclusive access to the ERDF’s “Youth Package 2016” projects. It is also understood that, in an attempt to secure additional, similar subsidies, the businessman registered another agricultural enterprise in his daughter’s name, capitalising on her eligibility criteria (aged between 18 and 40) for financial support.

The investigation has examined approximately €230 000 in granted subsidies. Of this, roughly €82 000 has already been recovered by the Paying Agency, nearly €70 000 has been subjected to seizure pending confiscation, and around €58 000 was never disbursed, due to the timely report submitted by the Guardia di Finanza of the Tuscany region. An administrative process is still underway, seeking to revoke approximately €20 000 of the subsidy distributed through the Tuscany Regional Agency for Agricultural Grants (ARTEA).

The suspects face charges of aggravated fraud and money laundering.

The European Public Prosecutor’s Office (EPPO) in Milan (Italy) is leading an investigation into a vast VAT fraud scheme, with estimated damage of at least €53 million. One person has been arrested and more than 10 are under investigation, with several searches executed in Italy (Milan, Novara, Genoa, Rome and Palermo) and in Switzerland.

According to the evidence, the scheme is in the area of VoIP (Voice over Intranet Protocol) – a technology that allows users to make voice calls via the intranet – involving companies in Czechia, Germany, Italy, Romania, Switzerland and the UK. The main beneficiary is understood to be a large company in Italy’s Emilia-Romagna region, with a core business of trading in the gas sector.

The estimated damage, at this point in the investigation, is €53 898 816.69, and this has been fully seized from the account of the large company alleged to be the main beneficiary. Seizures have also been made, during the searches, of cash and luxury watches. 

The investigation was opened following a report by the Italian Revenue Agency (Agenzia delle Entrate), and carried out by the Guardia di Finanza (the Italian Financial Police).

At the request of the European Public Prosecutor’s Office (EPPO) in Palermo (Italy), the Anti-Mafia Investigation Directorate (Direzione Investigativa Antimafia) has seized assets of a farmer suspected of agricultural funding fraud and ties to organised crime.

The suspect, who owns a farmhouse and agricultural real estate in the province of Catania, has family ties to people convicted of mafia association. The investigation began after the Anti-Mafia Investigative Directorate carried out checks on a list of companies that were not allowed to receive public funds.

According to the evidence, the suspect falsified statements and declared ownership and possession of land that she did not own, in the province of Enna, in order to illegally obtain €245 000 in agricultural funds from the European Union, between 2016 and 2021.

During the execution of the freezing order, issued by the judge for preliminary investigations in Enna, gold watches and jewellery were seized, as well as bank accounts and a portion of the farm, to the amount of €245 000.

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