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Operation in Italy against criminal group under investigation for massive VAT fraud: 12 arrests, including four public officials

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In an extensive operation carried out today, 21 March 2023, against a criminal group based in Naples (Italy), believed to have orchestrated a massive VAT fraud through the sales of electronic equipment, 12 people were arrested by the Italian Financial Police (Guardia di Finanza), including four public officials, for corruption offences. 

During the operation, led by the European Public Prosecutor’s Office (EPPO) in Naples and Milan, 25 searches were carried out in Naples, Caserta, Milan, Rome, Alessandria, Prato and Pistoia by 100 officers of the Italian Financial Police (Guardia di Finanza – Nucleo di polizia economico-finanziaria Napoli).

The Italian pre-trial judge, at the request of the EPPO's European Delegated Prosecutors, issued an order for detention on remand of the 12 suspects, and a freezing order for a value of approximately €8 million.

At stake is a suspected VAT carousel fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value-added tax (VAT).   

According to the investigation, the fraudulent scheme, which took place between 2017 and 2022, involved 170 shell companies in different countries, including Albania, Austria, Bulgaria, Czechia, Germany, Italy, the Netherlands, Poland, Slovakia, Slovenia, Spain and the USA. The electronic equipment (mainly AirPods) were ostensibly traded through these companies, using fictitious invoices, in order to evade the payment of VAT.

The goods were ultimately sold at very competitive prices through large organised distribution companies in several parts of Italy, creating serious competition distortions in this market.

The criminal profits were then laundered and also reinvested in metal companies selling copper and wire rods.

The crimes under investigation include conspiracy, VAT fraud, corruption, hacking and  money laundering.

During the operation, bank accounts were frozen, and cash, high-value watches, vehicles and jewellery were seized, in execution of the order issued by the judge.  All the 12 suspects were arrested: five entrepreneurs, three accountants and four public officials, all of them from Italy.

Further investigations are still ongoing into a massive fictitious VAT credit (€200 million) sold by a US company from Delaware to several Italian companies, and understood to have been already partially used to offset fiscal debts.

According to the evidence collected by the Guardia di Finanza, the criminal group was based in Naples, working as a professional company that sold VAT evasion models to its clients.

The organised criminal group also involved four public officials, three from Guardia di Finanza and one from the Tax Enforcement Agency (Agenzia delle Entrate - Riscossione), suspected not only of playing an active role in the VAT fraud mechanism, but also of accepting bribes in order to slow down criminal proceedings and tax audits, avoid the enforced payment of tax debts and illegally obtain information from police and judicial databases.

The Guardia di Finanza worked closely with the EPPO in the investigation, leading to the officials’ arrests, diligently and resolutely tackling the suspected criminal activity within their ranks.   

All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.