The Directorate of Economic Police proceeded to dismantle a criminal organization, whose members operated by establishing trading non-existent businessesthrough which they were carried out virtual transactions and spending tens of millions of euros.

According to ELAS, the members of the organization, since 2019, were involved in complex procedures aimed at deceiving the State through non-performance VATproceeding with interbank transfers of sums of money for pretend payment of transactions.

In order to deconstruct the criminal organization, after a months-long investigation under the supervision of the Hellenic Office of European Public Prosecutors, an extensive investigation was organized and carried out last Thursday. police operationwith the assistance of police officers from the Directorate of Criminal Investigations, the Attica Security Directorate and the Electronic Crime Prosecution Directorate, during which 21 members of the organization were arrested, including three who allegedly had a leadership role.

A case was filed against them criminal organizationforgery against the Greek government, cross-border VAT fraud with loss of VAT resources exceeding 10,000,000 eurosfor aiding and abetting, money laundering, as well as for violating the Weapons and Narcotics Act. The file also includes 41 people accused of the same crimes.

It was preceded by a related conclusion Anti-Money Laundering Authoritywhile the investigation of the case revealed that the members of the criminal organization had joined it with distinct roles, having an operational infrastructure with the aim of carrying out virtual transactions and illegal VAT refund.

How the circuit worked

As emphasized in the ELAS announcement, in order to achieve their goal, the key members were structured into two subgroups, which acted in coordination, having installed themselves covertly in different places in Attica, while taking the corresponding measures to avoid their disclosure ( continuous establishment of new legal entities, use of virtual networks and “strawman” telephone connections, physical transfer of money, etc.).

In more detail, in terms of the way the organization operates:

  • Establishment of shell companies: Members of the organization established “front” companies without real commercial activity in Greece, Cyprus and Slovakia. In these companies, people of low socio-economic status, such as unemployed and dependent persons, were declared as managers, with the aim of hiding the identity of the real managers. Indicative of the scope of their activity and infrastructure, is the fact that one of the two subgroups is allegedly linked to the establishment of at least 430 virtual entities or to legitimate operation.
  • “Carousel” fraud: The organization ran a complex scheme of “carousel fraud” in VAT, taking advantage of intra-Community transactions and the VAT non-return regime on sales within the EU. These companies operated as “missing traders”. who declared fictitious transactions to collect illegal VAT or claim refunds.
  • Money Laundering: Profits from tax evasion were trafficked through bank accounts of shell companies, making fictitious bank transactions and cash withdrawals. The perpetrators used encrypted networks (VPNs) and anonymous sim cards, while physically transferring money from regional members of the organization to conceal the origin of the illicit proceeds.
  • VAT returns: Members of the organization submitted false or inaccurate or incomplete VAT returns and proceeded to obtain fictitious invoices to create fictitious VAT refund claims. Through this method, the organization managed to illegally extract from the state an amount of more than 4.4 million euros in VAT refunds.
  • Recruiting peripheral members: Central members recruited people with low incomes and criminal backgrounds to place them as managers of the virtual businesses. The regional members acted as “personal tools” to cover the organization’s activities in cross-border VAT fraud, the banking and collection of the relevant proceeds and the money laundering. A characteristic of the last case is that these companies were not related to the companies that belonged to the range of activities of the organization, while they themselves had different objects of business activities, for the purpose of declaring virtual transactions.

At the same time, the leading members of the organization tried to avoid any obvious evidence of their association with the virtual companies and their managers, in order to avoid the legal consequences against them, as the obligation to return output VAT was transferred to the specific entities, while at the same time the legitimate companies in which the members participated, balanced the input-output VAT, thus depriving the State of the possibility to recover the lost revenue.

Overall through the corporate formations created by the members of the criminal organization achieved the loss of VAT resources of an amount exceeding 26,000,000 euros, for which virtual transactions of more than 150,000,000 euros had been declared.

In addition, a subgroup of the organization developed action outside of this context, where with the same method it proceeded through the creation of a system of companies in cross-border VAT fraud amounting to millions of euros, for the benefit of a company active in e-commerce.

Also, a key member of the organization succeeded in the fraudulent disbursement of money through the refundable advance measure for seven businesses he managed, obtaining an illegal benefit of approximately 770,000 euros.

In order to dismantle the organization, 39 searches were carried out (in homes, businesses, vehicles, physical), in which, among other things, the following were found and confiscated:

  • 139,696 euros and a banknote counter,
  • luxury car,
  • 10 watches of particularly high value,
  • 62 seals of legal entities,
  • 46 mobile phones,
  • 7 laptops and tablets,
  • pistol with 2 magazines,
  • loads of delivery notes, invoices, tax receipts and handwritten notes,
  • bank documents, cards, checks and check books of Greek and foreign credit institutions,
  • trace amount of drugs,
  • obviously fake identity card issued by foreign Authorities,
  • 2 POS machines and
  • a large number of external hard drives and portable digital data storage media (USB STICKS), while digital evidence was extracted for further investigation of their contents.

In the context of the investigation, a number of elements derived from the collection and processing of tax, accounting and banking data (opening of bank accounts of 230 entities), the analysis and correlation of numerous electronic traces, the execution of special investigative acts (removal of communications for a total of 85 telephone connections and the recording of 179,450 telephone conversations), the processing and description of video footage and the processing of voluminous correspondence (780 outgoing documents for data collection).

According to ELAS, the Directorate of Criminal Investigations also had a decisive contribution to the investigation of the case by sending 12 specialist digital data researchers of the Digital Evidence Examination Department, who, using modern forensic tools and technical intelligence applications, discovered and correlated critical evidence during the field investigations, among millions of digital data stored both locally and in the cloud. The seized digital data will be further analyzed by the laboratory of the Digital Evidence Examination Department.

Also, an important factor for the successful completion of the investigation was the cooperation and response of the AADE Services, as well as the credit institutions in providing data.

Those arrested, with the case file filed against them, were taken to the Greek Office of the European Public Prosecutors and referred to an Investigator.

Finally, ELAS reminds that citizens can contact, anonymously or by name, the telephone number 11012 or the website of the Greek State (gov.gr) “Complaint for financial crimes”, to provide information or report illegal and interfering actions or activities against the sector of the economy, public property, as well as social and insurance welfare and rights.