Title: Six Romanians and Six Companies Charged with Aggravated Fraud and Money Laundering in €4M EU Funds Case
Date: 31st January, 2024
European Public Prosecutor’s Office Announces Charges in Romania
The European Public Prosecutor’s Office (EPPO) in Iași, Romania, announced charges against six individuals and six companies on 31st January, 2024, in a suspected criminal organization case that defrauded the EU of €4 million, intended for medical and IT research projects.
Projects in Question
The investigation involved two projects:
- A research department for neuro-motor disease treatments
- Software development for combating illicit traffic of goods
Both projects aimed to purchase medical and IT equipment, along with software licenses, with EU financing covering up to 70% of the costs.
Manipulation of the System
Despite EU financing contracts requiring the beneficiaries to prove payment of their private contribution first, the alleged offenders manipulated the system, reportedly:
- Simulated acquisition contracts for necessary equipment
- Awarded it to a company they controlled which lacked capacity or resources
- Produced inflated invoices from a controlled company, costing around three times the real price
Complex Scheme to Certify Payment
The suspects created simulated payment circuits, depositing cash into beneficiaries’ accounts, transferring equipment payments to their controlled suppliers, and later withdrawing the funds.
Forged Documents
Additional charges include forging documents to show the equipment had been purchased and was functioning, often purchased much later than the undue payment receipt from EU funds managing authorities.
Use of Proceeds
Evidence suggests some illicit profits from the scheme were spent on the ringleader’s leisure activities, international travel to various EU Member States, and the maintenance of a power-yacht.
Seized Assets and Penalties
Previously, €8.5 million worth of real estate from the suspects was seized to recover damages to the EU budget 1(#footnotes).
The Romanian legislation imposes penalties of up to ten-and-a-half years and ten years in prison for aggravated subsidy fraud and money laundering, respectively 2(#footnotes).
European Public Prosecutor’s Office
The European Public Prosecutor’s Office (EPPO) is the independent EU public prosecution agency, responsible for investigating, prosecuting, and bringing to judgment crimes that damage the EU’s financial interests.