EU: Police Bust VAT Fraud Network That Stole Over $70 Million

Published: 07 May 2018

Europol-buildingEuropol's Headquarters (Photo Credit: OSeveno BY CC 3.0)

By Alex Cooper

Authorities across the European Union arrested 58 suspects and seized cars, documents, and US$477,000 in cash during a Value Added Tax, VAT, fraud investigation that damaged the EU’s economy by over $70 million.

Europol and Eurojust, along with EU member authorities arrested suspects in Belgium, Germany, Portugal, Spain, and searched over a hundred properties.

The investigation into the fraud stems from 2015 when Spanish police were warned of an organized crime group focusing on VAT fraud and money laundering, according to Europol’s statement from Friday.

The crime group purchased or pretended to purchase electronic products and sold them online. Some products were real while others weren’t.

The targets of the group’s schemes ranged from individuals to companies across the EU, said Eurojust in a statement.

Two men, a father and a son, allegedly managed the group for nearly nine years out of Spain, said Europol. Other members of the network included Portuguese, Italian, German, and Spanish nationals.

The group operated through tens of shell companies throughout the EU and the United States.

“The criminals managed to avoid VAT payments in Spain and yet receive VAT reimbursements through the companies set up in other Member States by simulating their business operations,” Eurojust said.

It also had a production center where they created the false invoices to conduct the VAT fraud on the electronic products as well as luxury vehicles being imported below invoice price.

Europol found the group had issued almost $300 million in fake invoices in three years.

Authorities discovered that the money had been layered through other shell companies when it was then pushed through Bulgarian and Hungarian bank accounts. Almost $170 million went through two Hungarian accounts.

The money ended up in Italy, Spain, and the US, being integrated in real estate, investments, and luxury cars.

“[Missing trader fraud] remains one of the most significant transnational frauds targeting all Member States,” said Jari Liukku, Europol’s Head of Serious and Organized Crime Center.

“Staggering sums of money are being taken directly from the citizens of the European Union by organised crime groups, depriving us all of essential services and infrastructure such as security, health, education or justice that should be funded by the proper collection of this revenue.”