Category: Czech Republic

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Action to counter undeclared labour and tax fraud in Germany: five arrests

Source: Eurojust

11 October 2024|

Eurojust supported authorities in Germany, Croatia, Czechia and Italy to counter a long-term fraud with illegal or undeclared labour and tax evasion. During an action day, five suspects were arrested for allegedly running a network of building enterprises that employed labourers without paying taxes and social levies. In total, 47 places were searched in the four countries concerned.

The perpetrators set up three different building companies, mainly operating in and around the city of Münster in Germany, which did not pay taxes or social levies on the wages of their employees. To mask this fraud, a string of so-called service companies were set up in the Czechia, which supplied fake invoices. One of the suspects also functioned as alleged manager or administrator of some of the enterprises, to give the fraud an official front.

The fraud ran at least since 2019 and was uncovered by the Public Prosecutor’s Office of Münster in North-Rhine Westphalia. At their request, Eurojust supported the recent action day, with the execution of European Investigation Orders in the four countries and provided legal assistance.

Operations were carried out at the request of and by the following authorities:

  • Germany: Public Prosecutor’s Office Münster; Main Custom Office Münster; Tax Investigation Münster
  • Croatia: County State Attorney’s Office in Rijeka
  • Czechia: Municipal Public Prosecutor’s Office Prague; Regional Police Directorate Prague, Economic Crime Unit; Regional Police Directorate České Budějovice, Economic Crime Unit
  • Italy: Public Prosecutor’s Office Trieste; Carabinieri Unit at Public Prosecutor’s Office Trieste
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Eurojust supports authorities in dismantling EUR 113 million fraudulent investment scheme

Source: Eurojust

A fraudulent pyramid scheme was taken down by authorities from Germany, Switzerland, Austria, Czechia, Lithuania and Liechtenstein, with the support of Eurojust and Europol. The organised crime group (OCG) used an investment model that focused on the leasing and subleasing of cryptocurrency machines, such as exchange machines and hardware for mining. The suspects were able to target thousands of victims, causing losses of up to EUR 113 million. During an action day on 11 June, six arrests were made, 29 searches were conducted and the suspects’ assets were frozen.

The advertised investment concept involved the leasing of cryptocurrency products, such as investments in server storage for internet cloud services and the subleasing of crypto exchange machines. The suspects promised returns of 70% before tax to those joining the scheme. Investigations by German authorities showed that the promised returns were not only unrealistic, but also impossible, as the leased equipment and systems allegedly did not exist.

As the promised investment scheme did not exist as advertised, the suspects created a pyramid scheme, where most of the revenue for earlier investors came from more recent investors. The funds collected were not used for the promised investments, but mainly for the suspects’ living expenses. Throughout the scheme, the suspects concluded thousands of contracts, earning up to EUR 113 million.

As soon as the fraudulent scheme was discovered by German authorities, two coordination meetings were held at Eurojust to exchange information and evidence with authorities from Germany, Switzerland, Austria, Czechia, Lithuania and Liechtenstein. To ensure a continued smooth cooperation, a joint investigation team (JIT) between German and Swiss authorities was set up with the support of Eurojust.

The cooperation between authorities resulted in an action day on 11 June, with the involvement of over 280 officers on the ground. The actions resulted in six arrests, 29 searches, the seizing of evidence, and the freezing of several assets. Due to the coordination between the authorities, and the use of Eurojust’s facilities, simultaneous actions were carried out in Germany, Switzerland, Austria, Czechia, Lithuania and Liechtenstein.

The following authorities were involved in the operation:

  • Germany: Public Prosecutor`s Office Erfurt, Criminal State Investigation Office Thuringia
  • Switzerland: Public Prosecutor’s Office of the Canton of Zurich
  • Austria: Central Public Prosecutor`s Office for Combating Economic Crimes and Corruption
  • Czechia: Municipal Public Prosecutor´s Office in Prague; Regional Directorate of Police of the Capital City of Prague
  • Lithuania: Vilnius Regional Prosecutor’s Office
  • Liechtenstein: Princely Court of Justice of Liechtenstein
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Take down of Austrian-based fraud scheme offering new type of crypto coin

Source: Eurojust

National authorities in Austria, Cyprus and the Czech Republic have taken decisive action against an online scam pretending to sell rights or tokens to an alleged new crypto currency. In a coordinated operation, supported by Eurojust and Europol, the six main suspects were arrested and six places were searched. In total, EUR 750.000 in assets, a property worth EUR 1.4 million and two cars were frozen/seized.

Between December 2017 and February 2018, the scammers pretended to have set up a genuine online trading company that had launched a new cryptocurrency. They offered 10 million tokens or respective rights to the new currency for sale. Investors paid them in regular crypto values such as bitcoin or ethereum. The Austrian-based fraudsters also claimed to have developed their own software and algorithm for the sale of the tokens, in order to gain credibility with investors. 

In February 2018, the perpetrators closed all their social media accounts and took the fake company’s homepage offline. This so-called exit scam made it clear to investors that they had been conned. They lost around EUR 6 million. Not all victims of the fraud have been identified at this stage.

Eurojust supported the action day against the online scam with a coordination centre, enabling real-time communication between all the authorities involved. This also enabled the rapid execution of European Arrest Warrants and search warrants. Europol assisted in the operation with a mobile office in Cyprus. Austrian police officers were present on the ground during a search in Cyprus. 

Europol’s specialists organised five operational meetings and worked closely with the Austrian desk at Eurojust, providing a holistic analysis picture of the investigation. In addition to supporting the Virtual Command Post set up at Eurojust, Europol deployed a specialist with mobile office to Cyprus in order to support the operational activities and facilitate the exchange of information.

The following authorities coordinated and supported the operations on the ground: 

  • Austria: Central Public Prosecutor´s Office for Combatting Economic Crimes and Corruption; Criminal Intelligence Service Austria – Cybercrime Competence Center (C4) 
  • Cyprus: Cyprus Police
  • Czech Republic: National Organised Crime Agency