Italian Authorities Uncover ‘Complex Criminal Scheme’ Involving 43 Companies, 11 Countries and $238 Million in Alcohol Tax Fraud

Italian authorities arrested five individuals accused of a highly complex “carousel fraud” scheme. (Photo: Niall Carson/PA Wire URN:6302728)

On Tuesday, The European Public Prosecutor’s Office declared the uncovering of an alcohol tax fraud scheme, which led to the arrest of five individuals last Friday.

Authorities accused the group of Italian citizens of orchestrating €220 million ($238.36 million) in value-added tax fraud of spirits exports to other countries within the European Union.

The European Public Prosecutor’s Office described the “complex criminal scheme” as “carousel fraud.” The system exploits rules implemented by the European Union on business between Member States, which are marked as exempt from VAT taxes.

The alleged criminal activity involved businesses spread throughout the 12 countries of Belgium, Bulgaria, Czechia, France, Hungary, the Netherlands, Portugal, Romania, Slovakia, Spain and the United Kingdom. Forty-three companies are accused of being involved in the sophisticated “white collar” crime.

17 individuals are accused of operating on the periphery of the alleged “carousel fraud,” and they occupied professional positions in the sales, accounting, consulting, management and logistic sectors of the beverage industry.

Europol defines carousel fraud as a highly complex criminal scheme typically performed by individuals operating within organized crime groups. Goods — in this case alcohol — are imported and sold through companies before being exported again. The E.U. claims it loses billions of euros in revenue from these types of crimes.

The EPPO reported that for six years, the alleged fraud generated €850 million ($920.98 million) in net sales and illegal profits of €220 million ($238.36 million).

The Court of Milan ordered the arrest of three suspects who currently reside in Dubai and Monaco. The two other individuals were put under house arrest. Authorities are in the process of investigating a sixth suspect, an Italian spirits entrepreneur, who has been charged and convicted of bribery and corruption in the past.

Authorities additionally froze the assets of the suspects, including bank accounts, real estate and luxury cars.

The accused individuals are currently awaiting trial.

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