FINANCIAL investigators in Europe have disrupted an organised criminal network for value-added tax (VAT) fraud associated with money laundering.
Six people have been arrested including a business owner with a large-scale business network, his son, the managing director of the company involved in the fraud and three other people.
In total, 16 properties in Spain and five in Italy were seized by authorities along with several vehicles and other belongings worth a total of €70 million.
On the day of the operation, one of the suspects was caught by financial investigators at the airport when travelling to the Maldives.
The operation really began from this point on, as the owner of the company, who was visiting Hungary for a short period, and the Hungarian CEO were arrested also at the airport. Later that day, the owner’s son arrived from Dubai and was also detained by the investigators.
The operation revealed that several employees had been falsely employed by a temporary employment agency for more money than reported to the Hungarian authorities, which caused millions of euros of losses in VAT and social security tax.
The investigation also revealed that the criminal network was responsible for money laundering, as the profits of bogus transactions were paid out as a dividend (one billion Hungarian forints) to a Cypriot company, then further transferred to a Spanish business in the form of a loan.
The financial investigators interrogated the suspects for high-value budgetary fraud, the use of false personal documents and money laundering offences. The criminals each face up to 20 years in prison.
Given the number of criminal assets seized, from the Hungarian National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal) authorities expect to recover the amount in tax lost from the state budget in full.