Financial Crime World

Title: Six Individuals and Companies Charged with Aggravated Fraud and Money Laundering in EU Funds Scam in Romania

€4 Million European Union Grants Allegedly Diverted

31st January 2024, Luxembourg

In a significant development, the European Public Prosecutor’s Office (EPPO) in Iași, Romania, has brought charges against six individuals and six companies for alleged aggravated fraud and money laundering. These suspects are believed to be part of a criminal organization that obtained €4 million in EU grants for medical and IT research through deceitful means.

Details of the Alleged Scam

Two projects were the focus of the grant fraud:

  1. A project aimed at establishing a research department for the treatment of neuro-motor diseases.
  2. A project to develop innovative software programs for combatting illegal goods trafficking.

The European Union financing, which could amount to up to 70%, was contingent on the beneficiaries providing proof of payment for their private contribution of 30% for medical and IT equipment or software licenses.

Circumventing the Rules

However, ongoing investigations suggest that the suspects violated the rules by:

  1. Awarding contracts to companies under their control.
  2. Presenting inflated invoices – up to three times the real cost.

Concealing Unlawful Activities

The suspects allegedly concealed their unlawful activities by:

  1. Manipulating payment transactions through circular payment schemes.
  2. Funneling funds through their own accounts and withdrawing cash.
  3. Forging documents to prove equipment functioned correctly and had been purchased within the required time frame.

Spending the Il-gotten Gains

The proceeds from the fraud were reportedly used on:

  1. Lavish international travel
  2. Recreational activities
  3. Maintenance of a power-yacht

Previous seizures include real estate totaling €8.5 million.

Aggravated subsidy fraud and money laundering carry penalties of up to ten-and-a-half years in prison under Romanian law. The European Public Prosecutor’s Office (EPPO) in Iași, Romania, investigates, prosecutes, and brings to judgment crimes against the financial interests of the European Union.