Eurojust supports an EPPO-led operation against carousel VAT fraud for the first time

Source: Eurojust

During the searches, law enforcement seized vast quantities of smartphones, worth more than EUR 15.3 million, as well as a yacht, worth EUR 3 million, and EUR 1.2 million in cash and cryptocurrency. Several luxury cars, jewellery, luxury watches and 2.5 kg of gold were also found.

The suspects are being investigated for large-scale cross-border Missing Trader Intra-Community (MTIC) fraud involving the trade of electronic goods and protective face masks through companies based in several European countries. MTIC fraud is the theft of value-added tax (VAT) from a government by organised crime groups. The perpetrators are believed to have defrauded up to EUR 195 million through several criminal schemes. Most of the VAT damage was caused in Sweden, where the missing trader companies were based.

Eurojust supported two investigations targeting the same crimes, one led by the EPPO and a second one led by the Swedish authorities. The EPPO investigation targeted the two managers and shareholders of a German distributor company that was acting as an in/out buffer/conduit company in the fraud chain. It purchased and sold mobile phones to other companies in several countries, which were then sold to the Swedish missing trader companies. Eurojust was instrumental in identifying ongoing linked investigations in Sweden, targeting the individual behind the Swedish missing trader companies.

The case was opened at Eurojust in 2021 at the request of the German European Delegated Prosecutor. Eurojust facilitated the cooperation between the EPPO and Sweden, Denmark, Hungary and Poland – all EU Member States that do not participate in the EPPO – and the United Kingdom. Eurojust can support cross-border cooperation in EPPO cases that involve countries that do not participate in the EPPO. The Agency also facilitated cooperation between Sweden and Malta.

The Agency hosted seven coordination meetings to facilitate judicial cooperation between the EPPO and the national authorities involved in the case. Eurojust facilitated the exchange of information and the execution of several European Investigation Orders and European Arrest Warrants.

During the action day, a coordination centre was set up at the EPPO premises in Luxembourg, for the first time jointly with Eurojust. The Eurojust coordination centre focused in particular on coordinating the execution of the Swedish measures in Malta.

In the run-up to the action day, Europol provided analytical support to the partners in this investigation. Furthermore, Europol supported the action day by providing over 100 secure communication channels (VCP – Virtual Command Post), and by deploying a specialist with a mobile office to the operational command centre at EPPO’s headquarters in Luxembourg.

Eurojust and the EPPO signed a Working Arrangement in February of 2021 to facilitate cooperation between the Agency and the EPPO.

The following authorities took part in this investigation:

  • Germany: German Tax Investigation Offices in Berlin, Bielefeld, Cottbus, Münster and Nuremberg; Police Headquarters from Nordhessen and Brandenburg; State Criminal Police Offices from Brandenburg and Berlin;
  • Malta: Malta Police Force – Financial Crimes Investigation Department and International Relations Unit;
  • Poland: Circuit Prosecutor’s Office in Warszawa and Zamość; Police Headquarters in Warszawa and Zamość;
  • Sweden: Swedish Economic Crime Authority.

Full-scale action against EUR 2 billion money laundering network via Lithuanian financial institution

Source: Eurojust

During an action day on 27 February, around 250 judicial representatives and law enforcement officers were active on the ground. In total 18 persons have been arrested, including the three main suspects. In total 55 places were searched and over EUR 11.5 million in assets and bank accounts have been frozen. Eurojust and Europol played pivotal roles in facilitating and coordinating the international activities.

The financial institution offered money laundering as a service to thousands of criminals across the EU, by making fictitious financial transactions via the web of enterprises, which were run by strawmen. It advertised its alleged consultancy services online and was set up in Lithuania in 2016 by an Italian-based OCG.

The financial institution was led by the two main suspects, who resided in Lithuania and Latvia. The OCG laundered the proceedings of a range of criminal activities, including tax evasion, cyber fraud, fake bankruptcy and organised crime such as drug trafficking. Part of the proceeds were injected into the Latvian and Lithuanian economies via the purchase of real estate and luxury vehicles.

The laundered money included the EUR 15 million from unlawfully obtained so-called building bonuses, provided by the Italian national authorities. These bonuses were given for renovation and insulation works and other energy-saving measures of existing buildings. In reality, no repairs took place, the applicants were not the owners or the buildings did not even exist. The main perpetrator of this fraud was a practising tax consultant, who arranged the awarding of bonuses for 72 other individuals who were aware of the abuse.

Investigations into the OCG were initiated in 2021 by the Public Prosecutor’s Offices of Naples and Lecce in Italy, involving their counterparts in Latvia and Lithuania in 2022 via Eurojust.

In 2022, the financial and judicial authorities in Lithuania already closed down the electronic payment institution. Its banking licence was revoked and bankruptcy procedures were started for non-compliance with money laundering prevention regulations. A rapid reaction of Latvian and Lithuanian authorities to reports on suspicious transactions led to the identification and freezing of millions in funds, real estate properties and luxury vehicles, which now can be confiscated.

During the same year, Eurojust supported the setting up and funding of a joint investigation team between all national authorities involved. Eurojust also set up a coordination centre to support the simultaneous actions in the three countries.

urthermore, Eurojust organised eight coordination meetings to prepare for the simultaneous actions of the Italian, Latvian and Lithuanian authorities. These preparations also prevented potential conflicts of jurisdiction. Eurojust has also already facilitated the restitution to Italy of over EUR 3 million of the illegally obtained public funds, which have been frozen by the Lithuanian authorities.

Europol has been supporting the case since January 2022, working closely with the national investigators to uncover the magnitude and complexity of the activities carried out by the OCG. During the action day, two Europol experts were deployed to Latvia to support the authorities with their investigative measures. A third Europol specialist was deployed to the coordination centre at Eurojust, with an analyst on hand at Europol’s headquarters to handle the contributions shared via Europol’s secure communication channels.

The operations against the OCG are the result of long-term intensive cooperation across Europe of the three countries involved. Eurojust Vice-President and National Member for Lithuania, Ms Margarita Šniutytė-Daugėlienė, acting National Member for Italy, Mr Aldo Ingangi, and National Member for Latvia, Ms Dagmāra Skudra, jointly stated: This collaboration really shows the importance of a well-coordinated and prepared approach across Europe. It is a clear example of the role Eurojust plays in transnational judicial cooperation and shows criminal networks, such as the one we tackled, that we know no borders either. We will continue to work closely together to get justice done and take on fraud involving public funds.

The actions in the three countries were carried out at the request of and by the following authorities:

  • Italy: Public Prosecutor’s Offices of Naples and Lecce; Guardia di Finanza of Naples and Lecce
  • Latvia: Prosecutor General’s Office, Rīga Judicial Region Prosecution Office; 1st Unit of the Economic Crime Enforcement Department of the Central Criminal Police Department of the State Police
  • Lithuania: Vilnius Regional Public Prosecutor’s Office; Vilnius County Police Headquarters

Crackdown on criminal network dealing with online investment fraud

Source: Eurojust

Judicial and law enforcement authorities in Germany, Cyprus, Bulgaria and Sweden have carried out a coordinated action against an organised crime group suspected of online trading fraud. The network defrauded numerous victims for several millions of euros in Germany and other European countries.

During a joint action day supported by Eurojust and Europol, four suspects were arrested and thirteen places were searched.

The suspects allegedly belong to a hierarchical criminal network with numerous members. The suspects ran several fraudulent online trading platforms from call centres and other locations in Cyprus. The perpetrators presented themselves as investment advisors and convinced victims to invest large amounts of money based on fake promises of profits.

The damage caused to German victims by the two main platforms is estimated at EUR 3.3 million and EUR 164 000, respectively. The total damage caused by the platforms is likely to be many times higher. Eurojust assisted the investigations by organising a coordination meeting and setting up a coordination centre to facilitate rapid cooperation between the judicial authorities during the joint action day. The Agency also assisted with the transmission and execution of six European Arrest Warrants and several European Investigation Orders.

Europol supported this case by hosting and financing several operational meetings as well as the action day. Furthermore, it provided analytical support and financial intelligence during the investigation. On the action day, a Europol specialist with a mobile office and a universal forensic extraction device (UFED) were deployed to Cyprus, while colleagues back in The Hague offered technical support for the virtual command post.

The following authorities took part in this investigation:

  • Germany: Public Prosecutor’s Office of Göttingen; Centre for Cybercrime, Police Göttingen
  • Bulgaria: Sofia City Public Prosecutor’s Office; General Directorate Bulgarian National Police
  • Cyprus: International Police Cooperation Sub-Directorate – Police Cooperation Bureau Cyprus Police
  • Sweden: Swedish Police Authority