Financial Crime World

Five Individuals and Companies Charged with EU Funds Fraud in Estonia

(Luxembourg, 13 October 2023) - The European Public Prosecutor’s Office (EPPO) in Tallinn, Estonia, has filed an indictment against:

  • Five individuals
  • Five companies

for allegedly committing fraud involving a European Union (EU) co-funded IT systems development project.

Background

A company specializing in transport, warehousing, and customs services along the e-commerce chain submitted an application to Enterprise Estonia (EAS) for a EU subsidy. The €725,000 project aimed to:

  • Create an IT programme
  • Carry out IT development activities

Forty-five percent of the project cost, approximately €325,000, was financed by the EU, with the remainder coming from the company’s funds.

Alleged Fraud

To receive EU funding, the company submitted invoices and documents to EAS, showing payments made with their own resources to other companies supplying the services. However, investigations uncovered that these payments were not made in reality.

Instead, the company allegedly:

  • Transferred the money to related firms
  • Used counterfeit invoices to create the semblance of genuine commercial transactions
  • Deceived the entity administering the grants

The money was reportedly rerouted back to the grant recipient or to companies linked to or controlled by the grant recipient.

Those Implicated

Two legal representatives of the company that received the funds, as well as the company they managed, have been accused of subsidy fraud. Additionally, three individuals and four companies have been charged as accomplices to the fraud.

Consequences

Convictions could carry prison sentences of up to five years for individuals and financial penalties for companies.

Investigation

The pre-trial investigation was spearheaded by the department of cyber and economic crimes of the Criminal Bureau of the Estonian Police and Border Guard Board, with oversight from the EPPO.

In May 2023, searches were executed at the residences of the suspected individuals and the premises of the companies under scrutiny, leading to the seizure of extensive documentation.

The preliminary hearing for the criminal case is scheduled to take place at the Harju County Court on 14 November 2023.

Important Reminder

All those implicated are presumed innocent until proven so by the competent Estonian courts of law.

European Public Prosecutor’s Office

The EPPO is the European Union’s independent public prosecution agency, responsible for investigating, prosecuting, and bringing to judgement crimes against the EU’s financial interests.