The European Public Prosecutor’s Office (EPPO) has filed an indictment in Latvia against the suspected ringleader of the latest large-scale alleged VAT fraud scheme in the European Union.
The authorities have estimated that the alleged scam led to €297 million in VAT losses.
Investigators said they suspected more 400 companies were allegedly involved in a complex web of fraud, money laundering and cybercrime.
The suspected leader, who was not named, would face up to 10 years for tax evasion and 12 years for money laundering if convicted.
Despite the indictment filed on January 27, the EPPO said the investigation was far from over.
EU prosecutors said they believed that the alleged VAT fraud ring spanned 16 member states, where suspects posed as legitimate electronics suppliers, selling more than €1.48 billion worth of gadgets through online marketplaces.
While unsuspecting customers paid VAT as usual, the suspected fraudsters simply vanished, dodging their tax obligations.
At the same time, shell companies in the scam allegedly claimed fraudulent VAT refunds, draining the EU of an estimated €297 million.
The cash was then apparently funnelled into offshore accounts, far from the reach of European authorities.
During the investigation, the EPPO seized a large quantity of documents and what they said was digital evidence, along with electronic devices worth more than €47.5 million, several luxury cars and €126,965 in cash.
Additionally, authorities have frozen 62 bank accounts, holding a total of more than €5.5 million.
Investigators said they suspected Russian organised crime groups could have been involved in the scheme, offering financial support in exchange for profits and influence over operations.
“Evidence points to these groups injecting assets into the criminal operation in exchange for periodic payments and influencing some aspects of its management,” the EU body said.
According to the organisation, the criminal syndicate employed the same tactics and infrastructure as those used in the notorious EPPO “Admiral Operation” between 2021 and 2022. That EU-wide VAT scam led to the unearthing of €2.2 billion in VAT fraud.
