Joint investigation by the National Police and the Tax Agency, coordinated with Europol and Eurojust

• The investigation has uncovered a VAT fraud at European level that reaches almost 60 million euros in tax, of which 45 affect the Spanish coffers.
• In the operation, 58 people were arrested in Badajoz, Elche (Alicante), Madrid, Malaga, Cordoba, the Basque Country, Murcia, Navarre, Pontevedra, Catalonia, Germany, Belgium and Portugal, and 62 raids and searches were carried out in Spain and another 39 in different parts of Europe.
• The main suspects, two citizens of Indian origin and Spanish nationality, moved to the USA in 2014 as a result of pressure from the Tax Agency, which had already initiated proceedings.
• The organization, made up of Spaniards, Italians and Portuguese, had a network of more than 100 companies – most of them fictitious and in the name of front men – based in a dozen countries.

May 4, 2018 .- Officials from the Tax Agency and agents from the National Police have carried out a joint investigation that has allowed the dismantling of one of the largest networks specialized in VAT and tax fraud. money laundering at European level.

58 people have been arrested in the operation in Badajoz, Elche (Alicante), Madrid, Malaga, Cordoba, the Basque Country, Murcia, Navarre, Pontevedra, Catalonia, Germany, Belgium and Portugal. In addition, 62 raids and searches were carried out in Spain and another 39 in different parts of Europe. The investigations carried out have uncovered VAT fraud at the European level that reaches almost 60 million euros in tax, of which 45 affect the Spanish coffers.

The complexity of the plot under investigation required international coordination, both at police level through Europol and at judicial level through Eurojust. Meetings were therefore held in both organisations with the participation of representatives of the police, customs and tax and judicial authorities of each affected country.

Origin of the research

Investigations began in 2015 following a financial intelligence report into a criminal organization specialized in VAT fraud from the sale of electronic devices, both genuine and counterfeit, and money laundering.

The criminal organization was allegedly run from Spain by two men, a father and son, of Indian origin and Spanish nationality, who had been operating in Europe for more than 9 years. In 2014, as a result of pressure from the Tax Agency, the main suspects moved their domicile to the United States, from where they continued their criminal activities.

The organisation, made up mainly of Spaniards, Italians and Portuguese, had a network of more than 100 companies – most of them fictitious and in the name of front men – based in different countries (Spain, Hungary, Germany, Italy, Romania, Bulgaria, Belgium, the USA, Portugal and Cyprus).

Modus operandi

The criminal organization had two nerve centers (in Madrid and Elche) from where the management of numerous Spanish and foreign instrumental companies (Hungarian, Bulgarian, Portuguese, Italian, Cypriot and Belgian) was controlled, whose function was none other than to evade the payment of VAT on products introduced in Spain and intended for consumption at abnormally reduced prices at the expense, precisely, of non-payment of VAT, thus creating unfair competition with the rest of the merchants in the affected sectors (mainly electronic components). .

In addition to the damage that this way of acting meant for the Public Treasury, the damage to the public coffers was even greater, since a part of these products was reintroduced into the fraudulent circuit simulating the sale outside of Spain and requesting the return of the Spanish VAT, a VAT that had not previously been entered.

Throughout the entire network there was an important structure used to issue false or cover billing, which in addition to being at the service of VAT fraud on electronic products, was also used to introduce high-end vehicles into Spain with a significant reduction in price. also due to non-payment of VAT. Investigators have been able to prove that the organisation has issued false invoices worth almost 250 million euros in three years.

The organisation also circulated money between the companies that made up the business network using a funnel system, so that all the money passed through Hungary or Bulgaria. Specifically, it has been established that the organisation has circulated more than 140 million euros over the course of two years through two Hungarian shell companies.

The money laundering operations were varied: real estate investments –mainly in Spain and the United States–, the purchase of a spring worth 3 million euros, the sale and purchase of luxury vehicles and bank loan lines and investments in companies related to the audiovisual world located in Spain, the United States and Hungary. The end-use of the money was, depending on the fraudulent scheme, the United States, Italy or Spain.

During the searches, 52 luxury vehicles, computer equipment, a firearm, extensive documentation and 400,000 euros in cash were seized, among other items. The investigation was led by the Court of Instruction number 5 of Elche and the District Prosecutor's Office of the Alicante town.

Note: Includes photographic annex.