Italian Financial Police Dismantle Massive VAT Fraud Scheme, Arrest 12 Suspects Including Public Officials

Operation Uncovered a Complex Network of Shell Companies and Criminal Activity

In a significant operation conducted today, the Italian Financial Police, led by the European Public Prosecutor’s Office (EPPO) in Naples and Milan, arrested 12 individuals suspected of orchestrating a massive Value-Added Tax (VAT) fraud scheme. The suspects include four public officials accused of corruption and bribery.

Assets Frozen and Cash Seized

The operation involved 100 officers from the Italian Financial Police and resulted in the freezing of approximately €8 million worth of assets, as well as the seizure of cash, high-value watches, vehicles, and jewelry. Searches were conducted at 25 locations across Naples, Caserta, Milan, Rome, Alessandria, Prato, and Pistoia.

Complex Scheme Involving Shell Companies and Fictitious Invoices

The suspected VAT carousel fraud scheme is believed to have taken place between 2017 and 2022 and involved 170 shell companies in 12 countries, including Albania, Austria, Bulgaria, Czechia, Germany, Italy, the Netherlands, Poland, Slovakia, Slovenia, Spain, and the USA. The scheme allegedly used fictitious invoices to evade VAT payments on the sale of electronic equipment, mainly AirPods.

Criminal Profits Laundered and Reinvested

The criminal profits were then laundered and reinvested in metal companies selling copper and wire rods. The crimes under investigation include conspiracy, VAT fraud, corruption, hacking, and money laundering.

Suspects Arrested and Charged

The suspects arrested included five entrepreneurs, three accountants, and four public officials from Italy. All 12 individuals are presumed innocent until proven guilty in the competent Italian courts of law.

Evidence Uncovered a Massive Fictitious VAT Credit Worth €200 Million

The investigation also uncovered a massive fictitious VAT credit worth €200 million sold by a US company to several Italian companies, which had already been partially used to offset fiscal debts. The evidence collected by the Guardia di Finanza suggests that the criminal group was based in Naples and worked as a professional company selling VAT evasion models to its clients.

Public Officials Accused of Corruption

The public officials suspected of involvement include three from the Italian Financial Police and one from the Tax Enforcement Agency, who are accused not only of playing an active role in the VAT fraud mechanism but also of accepting bribes to slow down criminal proceedings and tax audits, avoid the enforced payment of tax debts, and illegally obtain information from police and judicial databases.

EPPO Praised for Their Efforts

The Guardia di Finanza worked closely with the EPPO during the investigation, leading to the officials’ arrests. The agency’s efforts were praised for their diligence and resolve in tackling suspected criminal activity within their ranks.