The European Public Prosecutor’s Office, led by Laura Codrucci Kovesi, announces the implementation of the largest organized crime dossier uncovered in Europe to date, in which more than 200 raids were carried out in 22 countries targeting a complex VAT fraud scheme through the sale of electronic goods. According to the EPPO, we are talking about organized criminal groups spread across all member states, whose losses are currently estimated at 2.2 billion euros.

The EPPO announced in a press release published on Tuesday that more than 200 simultaneous raids were carried out in cooperation with law enforcement authorities in 14 EU member states targeting a complex VAT fraud scheme through the sale of popular electronic goods. Searches took place in Belgium, Cyprus, France, Germany, Greece, Hungary, Italy, Lithuania, Luxembourg, the Netherlands, Portugal, Romania, Slovakia and Spain. Also in the same file on October 12 and 13 were descents in the Czech Republic, Hungary, Italy, the Netherlands, Slovakia and Sweden.

“All collected data is being analyzed, the investigation of the organized criminal groups behind this scheme is ongoing. The estimated damage under investigation under Operation Admiral is currently €2.2 billion, and measures have been taken to compensate for the damage,” the EPPO said.

As the investigation began, it targeted more than 9,000 companies and 600 individuals

In April 2021, the Portuguese tax authorities in Coimbra investigated a company selling mobile phones, tablets, headphones and other electronic devices suspected of VAT fraud. When the EPPO started its work in June 2021, it was informed about this case by the Portuguese authorities.

From a national perspective, based on an administrative investigation, the billing and tax returns appeared to be in order. However, the Portuguese European Public Prosecutor’s Office decided to continue the investigation and, working together with other European public prosecutors, financial fraud analysts at the EPPO and representatives of Europol and national law enforcement authorities, gradually established links between the suspected Portuguese company and almost 9,000 other legal entities. legal entities and more than 600 individuals from different countries, say representatives of the EPPO.

Eighteen months after receiving the initial report, the EPPO says it is “what is believed to be the biggest VAT carousel fraud ever investigated in the EU”.

Criminal activity is widespread in the 22 member states of the EPPO, as well as in Hungary, Ireland, Sweden and Poland and third countries including Albania, China, Mauritius, Serbia, Singapore, Switzerland, Turkey, the United Arab Emirates, the United Kingdom and the United States.

It is almost impossible to detect fraud

According to the European Public Prosecutor’s Office, in addition to the high cost of damages, this type of fraud is distinguished by the extreme complexity of the chain of companies. From companies acting as purportedly clean suppliers of electronic devices and those claiming VAT refunds from national tax authorities by selling these devices online to individual customers – and then funneling the proceeds of those sales overseas before disappearing – to launderers money received in this criminal activity.

The EPPO says that these crimes would not have been possible without the participation of several well-organized criminal groups with specific roles in this network that could not be detected for years.

Carousel scam

According to Europol’s latest estimate, VAT carousel fraud is the most profitable crime in the EU, causing annual tax losses to member states of around €50 billion. Once it reaches a level of sophistication comparable to that seen in Operation Admiral, this type of fraud is nearly impossible to detect from a purely national perspective.

Using the EPPO’s case management system, access to national and European databases, supported by the analytical and investigative capacity of the Central European Prosecutor’s Office, as well as Europol and national law enforcement agencies, European prosecutors were able to conduct a joint investigation targeting the entire network of criminal groups, reports EPPO.

• “Thanks to Operation Admiral, the European Public Prosecutor’s Office draws attention to an extremely complex criminal industry. (…) Without the EPPO, the preparation of this type of operation would have lasted for years or, more likely, would not have taken place at all.
• Operation “Admiral” is a vivid demonstration of the advantages of a transnational prosecutor’s office.
• When it comes to VAT fraud, from a national perspective, losses can be estimated to be relatively small or non-existent, or even go unnoticed. (…)
• I believe this is the biggest VAT fraud in Europe discovered so far,” said EPPO’s chief prosecutor Laura Codruca Kovesi.