Authorities from the European Public Prosecutor’s Office have disclosed that multiple mafia groups were engaged in a sophisticated carousel fraud scheme related to value-added tax, a type of sales tax.
A total of 43 individuals across Europe have been apprehended on suspicion of participating in a 520 million euro ($549 million) tax fraud believed to have been orchestrated by various Italian mafia organizations.
Coordinated by the European Public Prosecutor’s Office (EPPO) in Milan and Palermo, with support from Europol and national law enforcement agencies, the investigation known as “Moby Dick” targeted the fraud scheme.
The fraudulent activities revolved around the import and export of electronic products such as laptops and wireless earphones.
It was announced on Thursday that the arrests took place not only in Italy but also in Spain, Bulgaria, Croatia, Cyprus, Luxembourg, the Netherlands, Slovakia, and the Czech Republic.
The EPPO revealed that the Naples-based Camorra mafia and the Cosa Nostra from Sicily were funneling their illegal profits into carousel fraud schemes involving value-added tax.
Laura Kövesi, the European Chief Prosecutor, stated, “Moby Dick is a significant investigation for the EPPO. We have long been warning about the substantial involvement of dangerous organized crime groups in defrauding the EU budget.”
Enormous Impact
“Aside from the colossal damages caused, we have also highlighted the threat to our internal security posed by their activities in this realm. This case sheds light on a major instance of such criminal behavior,” she added.
“‘Moby Dick’ illustrates that there is no clear distinction between two separate criminal worlds—the world of heinous criminals engaged in drug smuggling and human trafficking on one side, and the world of white-collar criminals involved in corruption and money laundering on the other.”
The EPPO mentioned that efforts were underway to freeze assets amounting to 520 million euro ($549 million) “to compensate for the losses incurred by the EU and national budgets.”
“In Italy alone, 129 bank accounts have been frozen, 192 real estate properties seized, along with 44 luxury cars and boats,” the statement read.
The financial police in Italy have seized real estate properties in various locations including the Sicilian and Ligurian Rivieras, Lake Como, and Milan.
Of the individuals arrested, 34 are in custody, nine are under house arrest, and four others are free but prohibited from working.
Arrests were made in Italy, Spain, Bulgaria, the Czech Republic, and the Netherlands.
Most European countries implement value-added tax (VAT) on goods sold or imported.
Carousel fraud, a form of VAT fraud, involves a group of companies circulating goods in a circular manner to evade paying taxes to government authorities.
The goods are passed around among companies before returning to the original seller without any tax being paid.
Unprecedented Complexity
“The level of complexity and efficiency demonstrated by this criminal syndicate engaged in VAT carousel fraud is unparalleled,” the EPPO stated. “Between 2020 and 2023, invoices were issued for the sales of airpods, laptops, and other electronic goods totaling over €1.3 billion ($1.37 billion).”
The EPPO and Europol received support from the Italian State Police and the Italian Financial Police in Milan, Palermo, and Varese.
Europol provided comprehensive analytical support, cross-referencing datasets to identify connections.
The agency also assisted in locating 45 individuals using travel intelligence.
Europol established a virtual command post to coordinate field officers conducting searches.
The term Camorra refers to mafia groups based in Naples, encompassing 111 clans, though the specific groups involved are unknown.
Similarly, Cosa Nostra refers to Sicilian mafia groups, which maintain ties with Italian American mafia families in the United States.
Reuters contributed to this report.
