On 28 February, 14 individuals believed to have orchestrated a massive EUR 195 million VAT fraud, spanning across 17 countries, were arrested. The arrests are the result of an investigation led by the European Public Prosecutor’s Office (EPPO) in Munich and Cologne (Germany) with Europol’s support. Among the arrested are some of the most high-profile criminal actors, who have been on Europol’s radar in recent years, in the area of VAT fraud.
Over 180 searches were carried out simultaneously in Albania, Austria, Cyprus, Croatia, Czechia, Estonia, Germany, Hungary, Italy, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Sweden and the United Kingdom. Over 680 tax and police investigators supported the investigative measures.
During the searches, law enforcement seized vast quantities of smartphones, worth more than EUR 15.3 million, as well as a yacht, worth EUR 3 million, and EUR 1.2 million in cash and cryptocurrency. Several cars were seized, including a Rolls Royce, a BMW and a Range Rover. Jewellery, luxury watches and 2.5 kilograms of gold were also found in the suspects’ residences.
The investigation revealed that the suspected organisers of the VAT fraud scheme created a complex criminal ecosystem, which allowed them to defraud up to EUR 195 million through several criminal schemes involving the sale of small electronic devices, such as smartphones.
It is understood that the suspects used fraudulent chains of missing traders, which would vanish without fulfilling their tax obligations.
In 2020, the same organisers of these VAT fraud schemes are believed to have entered the market for protective face masks. The company managed by the suspects is understood to have bought them from a missing trader, and channelled them through several buffer companies to disguise their final destination.
On paper, their company was based in Hong Kong, but the face masks were actually in a warehouse in Germany, and remained there until the German Federal Ministry of Health purchased them from the company ostensibly based in Hong Kong. According to the investigation, neither the company at the beginning of the supply chain, nor the Hong Kong-based company, reimbursed the VAT they had received upon the sale of the face masks to the Ministry.
The arrests are the result of years of special investigative measures carried out by a number of German Tax Investigation Offices in Berlin, Bielefeld, Cottbus, Münster and Nuremberg. This extensive undertaking also counted on the support of Europol and Eurojust. In Germany, these included Police Headquarters (Polizeipräsidium) from Nordhessen and Brandenburg, as well and State Criminal Police Offices (Landeskriminalamt) from Brandenburg and Berlin.
Leading up to the action day, Europol provided analytical support to the partners in this investigation. Furthermore, Europol supported the action day by providing over 100 secure communication channels (VCP-Virtual Command Post), deploying a specialist with a mobile office to the operational command centre at EPPO’s headquarters in Luxembourg.
The case was opened at Eurojust in 2021 at the request of the German European delegated prosecutor. Seven coordination meetings were hosted by the Agency to facilitate judicial cooperation between the EPPO and national authorities involved in the case. Eurojust facilitated the exchange of information and the execution of several European Investigation Orders and European Arrest Warrants.
Source – Europol