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Romania: Three detained for fraud involving medical and IT research, €8,5 million seized

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(Luxembourg, 04 July 2023) – The European Public Prosecutor’s Office (EPPO) in Iași (Romania) last week detained three people and seized €8,5 million, in an investigation into a suspected criminal organisation that obtained millions in EU funds for medical and IT research.

The suspected ringleader of the group was captured last Wednesday, 28 June 2023, while trying to go through passport control at the Bucharest International Airport to board a flight to Athens. Two other suspects were also detained on the same day. They were placed under judicial control by the Court, with interdiction to leave the country and to contact other parties in the process, as well as mandatory periodical presentation in the police station of their place of residence.

The crimes under investigation include expenditure fraud, money laundering, setting up a criminal organisation and forgery of documents. The case concerns two projects to purchase medical and IT equipment and software licenses, financed up to 70% by the EU. One of the projects aimed at establishing a research department for the treatment of neuromotor diseases and the other to develop innovative software programs for combatting illegal trafficking of goods. The total value of the contracts amounts to approximately €9 million.

According to the financing contracts, the beneficiaries had to pay and provide proof of payment of their private contribution, amounting to 30% of the value of each invoice issued by the suppliers of the equipment, and only afterwards were they entitled to obtain the payment of the remaining 70%.

However, according to the investigation, the suspects simulated the procedure for awarding the acquisition contracts, in order to award both supply contracts to a company under their control, which did not have the capacity or resources to purchase the equipment. In addition, the suspects are believed to have used another company under their control to produce invoices with significantly increased prices (approximately three times the real price).

The members of the group are also suspected of having forged documents to certify that the equipment had been purchased and was functioning properly. In most cases, according to the evidence, the equipment was purchased at a much later date, after unduly receiving the payments from the managing authority for the EU funds.

Simulated circuits of payment

In order to certify the payment of their private contribution, the suspects allegedly set up simulated circuits of payment for each invoice, depositing cash in the accounts of the beneficiaries, transferring the payment of the equipment to the accounts of the supplier under their control and later withdrawing it in cash for their own benefit. According to the evidence, part of the illicit profits were used on leisure activities and international travel of the suspected ringleader to several Member States, as well as the maintenance of a power-yacht.

The suspected criminal organisation is believed to have fraudulently obtained approximately €4 million in EU funds.

In order to recover the damage to the EU budget, real estate of the suspects was seized, amounting to €8,5 million. The law establishes that, for each suspect, seizures have to be applied up to the probable total amount of the damage caused.

In addition to the three suspects detained on Wednesday, three other suspects were placed under judicial control.

This investigation, led by the EPPO’s office in Iași, also involved European Delegated Prosecutors in Bulgaria (where a number of purchases was made), as well as in Germany, Greece, Italy, France, the Netherlands and Spain (where part of the profits were allegedly spent). The EPPO also counted on the support of the following law enforcement agencies:

– The EPPO Support Structure in Romania (Structura de Sprijin a procurorilor europeni delegați in România)

– General Anticorruption Directorate (Direcția Generală Anticorupție)

– Iași County Police Inspectorate – Service for Investigating Economic Crime (Inspectoratul Județean de Poliție Iasi)

– Iași Brigade for Combatting Organised Crime (Brigada de Combatere a Criminalității Organizate Iași)

– Brigade for Special Operations Iași (Brigada de Operatiuni Speciale Iasi)

– Police Directorate for Transportation (Directia de Politie Transporturi)

– General Inspectorate of Border Police (Inspectoratul General al Politiei de Frontiera)

– The Romanian Gendarmerie – Mobile Brigades of Bucharest and Bacău and the Iași Gendarme Inspectorate (Jandarmeria Româna – Brigăzile Mobile Bucuresti si Bacau, Inspectoratul de Jandarmi Județean Iași)

– Department for Fight Against Fraud (Departamentul pentru Luptă Antifraudă – the Romanian Anti-fraud coordination service – AFCOS)