The European Public Prosecutor’s Office (EPPO) in Riga (Latvia) and Vilnius (Lithuania) mobilised during the last two days 624 law enforcement officers to perform searches and arrests across 16 countries. Based on findings from the Admiral investigation, the EPPO uncovered another criminal syndicate suspected of a complex VAT fraud scheme involving the trade of popular electronic goods and creating an estimated VAT loss of €297 million.
Investigation Admiral, announced in November 2022, is considered the biggest VAT fraud ever investigated in the EU with a damage now estimated at €2.9 billion. Taking advantage of its decentralised model and central analytical capacity, the EPPO was able to establish links between persons and companies under investigation Admiral, and a criminal syndicate based in the Baltics.
The investigation revealed that this syndicate was using the same modus operandi, and partly also the same organisation and infrastructure, as the perpetrators investigated under Admiral, to carry out a massive VAT carousel fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value-added tax.
Fraudulent chain of deception
According to the investigation, the suspects established companies in 15 EU Member States, acting as legitimate suppliers of electronic goods. They sold over €1.48 billion worth of popular electronic devices via online marketplaces to customers located in the EU.
While the end customers paid VAT on their purchases, the selling companies would not fulfil their tax obligations. By simply disappearing, they would avoid to transfer the amounts due to the responsible national tax authorities. Other companies in the fraudulent chain would subsequently claim VAT reimbursement from the national tax authorities, creating an estimated VAT damage of €297 million. The proceeds of this criminal activity would be moved to offshore accounts.
Poly-criminal and international network
The EPPO suspects over 400 companies to be part of this complex fraudulent scheme, which is also believed to have been used for laundering proceeds stemming from drug trafficking, different types of cybercrime, and investment fraud.
The investigation uncovered a possible Russian organised crime footprint, indicating that certain Russian criminal networks may have been involved with this syndicate. Evidence points to these groups injecting assets into the criminal operation in exchange for periodic payments and influencing some aspects of its management.
Cross-border action
During today’s transnational action led by the EPPO, more than 350 searches and investigative measures were carried out in 16 countries (Austria, Belgium, Bulgaria, Cyprus, Czechia, Estonia, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Poland, the Netherlands, Slovakia, Spain) and 32 people were detained in Estonia, Latvia and Lithuania, out of which three remain under arrest. Over 200 Customs and Tax Police, State Police and Corruption Prevention and Combating Bureau investigators and criminal intelligence officers supported the investigative measures in Latvia alone.
During the searches, law enforcement seized vast quantities of documents and digital evidence, small electronic devices (e.g. mobile phones, tablets, headphones) worth more than €47.5 million, several luxury cars, and €126 965 in cash. In addition, 62 bank accounts were frozen with a value of over € 5.5 million. These are preliminary results and they will evolve throughout the coming days and weeks.
List of the main partners and national authorities involved:
- Europol
- Eurojust
- Austria: Tax investigation office
- Belgium: Cellule de Traitement des Informations Financières (CETIF)
- Bulgaria: Bulgaria’s National Investigation Service
- Czechia: Police of the Czech Republic – National Organized Crime Agency (NCOZ)
- Cyprus: Cypriot Tax Department
- Estonia: Estonian Tax and Customs Board, Financial Intelligence Unit
- France: Office National Antifraude (ONAF)
- Germany: 17 Tax Investigation Offices
- Italy: Guardia di Finanza (GdF), Financial Intelligence Unit
- Netherlands: Netherlands’ Belastingdienst – Fiscal Information and Investigation Service (FIOD)
- Latvia: Tax and Customs Police, State Police, Corruption Prevention and Combating Bureau
- Lithuania: Special Tax Board and Financial Criminal Investigation Service (FCIS), Financial Intelligence Unit
- Luxembourg: Luxembourg Judiciary Police and Cellule de Renseignement Financier (CRF)
- Slovakia: Slovak Police (Ministry of Interior of the Slovak Republic)
- Spain: Policia Nacional, Financial Intelligence Unit
- Poland: Public Prosecutor’s Office of Warsaw (Prokuratura Okręgowa w Warszawie) and Financial Intelligence Unit
Source: eppo.europa.eu