EU Prosecutor Indicts Eight People for 80 Million Euro Tax Fraud

Published: 30 July 2023

EPPO Luxury Car SeizedSome of the luxury cars seized in EPPO's operation last year. (Photo: EPPO, License)

By Zdravko Ljubas

The European Union Prosecutor’s Office in Berlin said on Thursday that it has filed an indictment against eight suspects in connection with an 80 million euro (US$88.1 million) VAT fraud scheme involving the trading of luxury automobiles and medical face masks.

The fraud was carried out through a complicated network in which luxury cars and medical face masks were swapped through shell firms in several countries, including Czechia, Germany, and Poland, according to the European Public Prosecutor’s Office (EPPO).

The scheme, which allegedly had a turnover of hundreds of millions of euros, was based on the sale of high-priced cars through missing trader businesses that did not comply with their tax responsibilities, according to the accusation.

Parallel chains of bogus invoices and carousel transactions were used to fraudulently claim VAT refunds from national tax authorities, and the criminal scheme took advantage of EU legislation governing cross-border transactions among its member states, such as VAT exemption, according to EPPO.

It also said that four suspects, including the alleged ringleader, are accused of organizing the scheme as a criminal group.

Two others are charged with money laundering, one with aiding and abetting, the other, a notary, suspected of assisting the organized criminal gang for several years, is charged with forgery and fraudulent notarization, EPPO said.

The defendants are said to have exploited persons with financial problems from Poland and Latvia and used them as straw men. The primary suspects are thought to have acted as managing directors of a number of companies by faking signatures with the help of a notary and a tax advisor.

The EPPO claimed that a Polish currency exchange firm operated by the main defendants was used as a cover to launder and split earnings.

Following the EPPO’s request, German tax law enforcement searched several locations across the country and detained two of the suspects in May of last year.

Further examination of seized communication data helped identify the suspected ringleader, who was then arrested in Austria.

The EPPO also stated that during financial investigations in Croatia, Czechia, France, Germany, and Poland, bank accounts were blocked, and real estate, cars, and luxury items worth an estimated 5.2 million euro ($5.72 million) were seized.

Although they were not charged with any of the crimes, the confiscation processes also targeted two people and three firms who were thought to have obtained illegal gains as a result of their execution, totaling 7.75 million euro ($6.33 million), according to EPPO.