EPPO

At the request of the European Public Prosecutor’s office (EPPO) in Milan (Italy), the Carabinieri’s Labour Protection Group executed precautionary measures against three Italian entrepreneurs. Two were subjected to house arrest, and one prohibited from dealing with public administrations and exercising executive offices in legal entities and businesses.

The investigation concerns the distribution of EU funds through the ‘Fondo Nuove Competenze’ project, meant to support the training of company employees, by paying their wages while being assigned to follow courses meant to enhance their skills.

 Through wiretapping, financial flows analysis, and the interview of over 200 workers, the investigation revealed that two corporate groups providing consultancy services defrauded the fund by organising fictitious training courses for 1500 employees from 32 companies, making use of a dedicated IT platform.

The total damage caused by the scheme is estimated at €40 million. Furthermore, evidence revealed that the suspects spent the proceeds of the fraud to purchase real estate worth €20 million.

An additional seven searches were executed against seven natural and legal persons investigated for the same offences, though not subject to precautionary measures.

In total, seven individuals with various roles in the articulated illicit scheme to defraud the EU, as well as seven companies used to pursue the same objective, are under investigation.

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

The European Public Prosecutor’s Office (EPPO) in Venice (Italy) and Zagreb (Croatia) jointly carried out arrests and searches in both Croatia and Italy, in an investigation targeting a large-scale VAT fraud scheme related to an organised criminal group trading in electronic goods and hygiene products, causing an estimated damage of over €78 million in unpaid VAT. This is the first multimillion VAT fraud in Croatia uncovered by the EPPO.

In Croatia, six suspects were arrested and the EPPO in Zagreb will request the pre-trial detention of five of them. The County Court in Zagreb also issued freezing orders for two properties and eight vehicles worth € 650 000 in total. In Italy, the Judge for Preliminary Investigations at the Court of Naples issued a freezing order for a value of €33 million against seven suspects, who are believed to be the leaders of the organised criminal group and against 23 companies controlled by them. So far, real estate, luxury cars, high-value jewellery and cash worth over €1 million have been seized today and seizures are still ongoing. The EPPO in Venice also requested the judge to issue an order for detention in respect of the seven suspects, and to ban additional 27 suspects from engaging in certain business activities. 

The arrests follow years of investigation conducted in cooperation with the Croatian Tax Administration’s Independent Sector for Financial Investigations (Samostalni sektor za financijske istrage Porezne uprave Ministarstva financija), the Bjelovar-Bilogora Police Department (Policijska uprava bjelovarsko-bilogorska), the National Police Office for the Suppression of Corruption and Organised Crime (Policijski nacionalni ured za suzbijanje korupcije i organiziranog kriminaliteta) and the Italian Financial Police (Guardia di Finanza) in Verona. The searches mobilised over 110 police officers, who searched 28 homes and offices in Primorska-goranska County, Istria County and the city of Zagreb in Croatia and in Aversa, Gorizia, Naples, Nocera Superiore, Padova and Pozzuoli in Italy. 

At the heart of the criminal scheme are three suspects who, in their capacities as founders, directors and business managers of several companies, created and led a criminal association with members in Croatia and Italy. Together, they allegedly set up a large-scale VAT fraud scheme in the trade in electronic goods and hygiene products in Italy and other EU Member States.

Based on the evidence, the members of the criminal association operated a network of conduit companies used to record fictitious movements of goods to missing traders in Italy and other EU Member States, creating the appearance of lawful intra-EU supplies and enabling the traders to claim undue VAT deductions or disappear without paying the tax due. Within this arrangement, several suspects allegedly provided warehousing, transport and related logistical services through companies under their control, while others offered accounting and administrative support to maintain the appearance of legitimate activity and to conceal the fraudulent transactions. 

Some of the suspects in this investigation are also connected to a separate VAT carousel fraud investigation in Italy involving the sales of small electronic goods and in which the EPPO previously arrested three suspects. The trial against them is ongoing. 

All persons concerned are presumed to be innocent until proven guilty in the competent Croatian and 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 Pescara carried out searches and seized assets on Tuesday, in an investigation into a €3.7 million fraud scheme to obtain funds intended to support small and medium companies (SMEs), including those affected by Russia’s war of aggression against Ukraine.  

Pursuant to a court order to freeze up to €3.7 million, obtained by the EPPO, the Italian Financial Police conducted searches in the cities of Pescara, Chieti and Agrigento, and seized a real estate property, eight luxury watches, a golden necklace and cash. A total of 50 bank accounts belonging to the suspects were also frozen.

On the radar of the EPPO are ten suspects, believed to operate a criminal organisation to carry out fraud schemes intended to illicitly obtain public funds (both national and European) and loans for Italian companies. The funding was intended to support SMEs, promote digital transition or assist companies impacted by Russia’s war of aggression against Ukraine. 

The investigation began when a tax audit of a company operating in the city of Pescara uncovered possible fraud involving false declarations to obtain EU and national funds, including those from the Next Generation EU programme. In particular, the investigation brought to light forged invoices and balance sheets of Italian companies, which were used to inflate their turnover and thereby demonstrate financial capacity to receive grants for the years 2021 and 2022. 

Requests for funding were then submitted to SIMEST, Italy’s financial institution for the development and promotion of the activities of Italian companies abroad. It is understood that the fraudulent scheme was also used to obtain loans guaranteed by Medio Credito Centrale – Banca del Mezzogiorno, which manages public guarantee schemes. The evidence indicates that the profits were subsequently laundered.

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

At the request of the European Public Prosecutor’s Office (EPPO) in Bologna and Turin (Italy), the Italian Financial Police (Guardia di Finanza) and Italy’s Customs and Monopolies Agency (Agenzia delle Dogane e dei Monopoli) in Florence carried out searches and preventive seizures, and arrested two individuals, as part of an investigation into a €19 million VAT fraud linked to the smuggling of goods from China.

The investigation concerns a fraudulent scheme where large quantities of goods were allegedly smuggled from China to Italy, by abusing the Customs Procedure 42 (CP42). This procedure, created to simplify cross-border trade, exempts importers from paying VAT in the country of importation, if the imported goods are subsequently transported to another EU Member State. The tax must then be paid upon release of the goods.

Based on the evidence, the smuggled goods are believed to have never left the Italian territory. After being cleared by customs, they were released onto the Italian market with artificially lowered prices due to the tax exemption provided by CP42. For the scheme to appear credible, the suspects allegedly used a tax warehouse in Sesto Fiorentino and a vast number of both Italian and foreign shell companies, simulating intra-community sales. 

The investigation also revealed an abuse of Customs Procedure 45. This practice applies to VAT warehouses, which store items under tax suspension until they are sold to the end buyer. After extracting the items and issuing self-invoices, the importers sent fictitious invoices to EU corporations while the goods were already unlawfully circulating in Italy, and no VAT was paid.

Earlier in this investigation, searches in Bulgaria, Czechia, Germany, Hungary, Poland and Spain revealed the absence of adequate business structures of the companies participating in the scheme.

This investigation also counted on the support of the European Anti-Fraud Office (OLAF) and Europol.

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 and Naples (Italy), the Italian Financial Police (Guardia di Finanza) in Naples carried out preventive seizures today, in an investigation into a €260 million VAT fraud scheme involving a criminal network alleged to have imported fuel to the Italian market while systematically evading VAT.

The seized assets belong to the company owned by the ringleader of the criminal network, an entrepreneur from Campania, who had been convicted at first instance on 15 October and sentenced to eight years in prison and a fine of €8 600, along with the confiscation of assets up to €73 million, and a ban on business activity.

Based on the evidence, the company was formally registered in the name of the convict’s spouse but, in fact, under his control. It owned a tax warehouse in Magenta (Milan province), which was used to facilitate the VAT carousel fraud schemes involving the trade of fuel.

Earlier in this investigation, in March 2024, the criminal group behind the scheme was dismantled, involving 59 suspects and 13 companies. Judicial measures were ordered against eight individuals, including the suspected ringleaders. Thanks to the investigation, assets worth €20 million, including a tourism resort and over 150 properties, belonging to the criminal syndicate, had been identified and seized in April this year.

At the heart of the criminal scheme is a criminal association, whose members are sometimes linked by family ties, operating a massive VAT fraud in the fuel trading sector, with branches in Italy and abroad. According to the investigation, the fuel was imported from suppliers located in Croatia and Slovenia, as well as other countries, using a chain of more than 40 missing traders in Italy, which would vanish without fulfilling their tax obligations. 

It is believed that the fraudulent activities generated invoices for simulated transactions amounting to over €1 billion, causing an estimated damage of around €260 million in unpaid VAT. The criminal group is also suspected of laundering over €35 million of the illicit proceeds, using bank accounts of companies located in Hungary and Romania. This money would ultimately be handed over in cash to the perpetrators of the fraud, following systematic bank withdrawals. 

The VAT evasion also allowed the group to resell the fuel at extremely advantageous prices, distorting the principles of fair competition on the market.