Italian investigators, in collaboration with the EPPO, allege that the white collar criminal group falsified invoices for large quantity alcohol exports in order to circumvent domestic tax laws. By falsely stating that its shipments were destined for export to other EU markets instead of Italy, the group managed to fraudulently shield its profits from the otherwise mandatory VAT, investigators said.
The scheme implicated 43 companies across 10 European Union countries as well as the U.K. Authorities say that a network of 17 individuals, including sales agents, consultants, and accounting and logistics managers, collaborated to create a fake trade of 850 million euros ($921 million) in alcoholic goods around the continent.
In reality, however, the alcohol was destined for Italian markets, EPPO said. If true, the fraudulent invoices showed shipments moving around the EU, while actually circling what should have been tax payments back into their own pockets in Italy.
It is because of this modus operandi that VAT fraud is also widely known as carousel fraud.
Investigators allege that, between 2015 and 2021, the suspects managed to pocket 220 million euros ($323.6 million) in stolen revenue that should’ve otherwise gone to Italy’s tax coffers.
The five individuals face various charges including association with a cross-border criminal entity, VAT fraud, forgery of commercial operations, and money laundering. Authorities also believe that the five were helped by a sixth member, an Italian entrepreneur, who in the past was convicted of corruption and is under investigation for the bribery of a police officer.
He remains under house arrest while the investigation is carried out.
As for the others, a judge issued a freezing order, at EPPO’s request, on their bank accounts, real estate, and luxury cars.
