Italian Authorities Detain 10 Suspects of Massive Tax Credit Fraud

Published: 26 May 2023

Construction Work

The criminal association obtained government grants - known as "bonus facciate" (bonus facades) - through fictitious tax credits, in a scheme meant to support the renovation and improvement of building exteriors, resulting in a €17 million fraud scheme. (Photo: PxHere, License)

By Erika Di Benedetto

Italian authorities have detained 10 people believed to be members of a criminal group that fraudulently obtained government grants worth 17 million euro (US$18,3 million) for the renovation and improvement of building facades.

Three suspects were taken into custody while the other seven were put under house arrest, according to a Financial Police statement.

The preliminary investigations judge in Verona, at the request of the investigating magistrate, also ordered the precautionary seizure of assets worth over five million dollars, including money on bank accounts, cars, real estate, and companies, hotels, pastry shops, and restaurants located around Lake Garda.

The group allegedly obtained government grants known as "bonus facade," by using fictitious tax credits. Once monetized, these credits were laundered through the acquisition of businesses and assets in the Lake Garda area. The case is further aggravated by its transnational character, as the suspects operated both domestically and abroad.

The "bonus facade" grant is intended to support the renovation and improvement of building exteriors. The scheme's objective is to promote energy efficiency and the revitalization of urban areas.

The detentions were carried out with the collaboration of multiple law enforcement agencies, highlighting the importance of interagency cooperation in the fight against fraud and corruption. The investigation is ongoing, and authorities say that more arrests could be made in the coming weeks.

The case also raises questions about the effectiveness of government oversight and regulation of such programs. While incentives and subsidies can be an important tool to promote energy efficiency and other policy goals, they can also be vulnerable to fraud and abuse.