Police in Europe have arrested 43 people suspected of being involved in a 520 million euro (about $550 million) tax fraud scheme that is believed to have been masterminded by several Italian mafia groups.
The European Public Prosecutor’s Office (EPPO) in the Italian cities of Milan and Palermo, backed by Europol and national law enforcement agencies, mounted an investigation code-named “Moby Dick.”
The fraud involved the import and export of laptops, wireless earphones, and other electronic goods.
On Nov. 14, the EPPO announced that 43 people had been arrested in an operation that included not just Italy but also Spain, Bulgaria, Croatia, Cyprus, Luxembourg, the Netherlands, Slovakia, and the Czech Republic.
It said the Naples-based Camorra mafia and the Cosa Nostra, from Sicily, were both investing their illicit profits in carousel fraud involving value-added tax (VAT).
European Chief Prosecutor Laura Kovesi said: “Moby Dick is a defining investigation for the EPPO. It has been a while since we started to ring the alarm bell about dangerous organized crime groups’ heavy involvement in fraud to the EU budget.
“Beyond the colossal damages that they create, we have been warning about the threat to our internal security their activity in this field represents. We now shed light on a first such big case.
“‘Moby Dick’ shows that there are not two separate criminal worlds. The world of the really bad and dangerous criminals smuggling drugs, trafficking people on one side, and the world of white-collar criminals, ‘merely’ corrupting and laundering money, on the other side.”
The EPPO said it was in the process of freezing assets of about $550 million “to compensate the damage to the EU and the national budgets.”
“In Italy alone, 129 bank accounts are being frozen, and 192 real estate properties seized, together with 44 luxury cars and boats,” it stated.
Italy’s financial police have also seized real estate complexes on the Sicilian and Ligurian Rivieras, on Lake Como and in Milan.
Of those arrested, 34 were being held in prison, nine were under house arrest, and four others are at liberty but have been banned from working, according to the EPPO.
The arrests were made in Italy, Spain, Bulgaria, the Czech Republic, and the Netherlands.
Most European countries have a VAT, an excise that applies to most goods sold or imported.
Carousel fraud is a type of VAT fraud in which a group of companies sell and buy goods in a circle, with the ultimate goal of defrauding government tax collectors.
‘Unprecedented’ Level Of Complexity
“The level of complexity and efficiency of this criminal syndicate committing VAT carousel fraud is unprecedented,” the EPPO stated. “Between 2020 and 2023, it issued invoices for the sales of [wireless headphones], laptops and other electronic goods of [about $1.38 billion].”The EPPO and Europol were supported by the Italian State Police and the Italian Financial Police of Milan, Palermo, and Varese.
Europol said it “conducted comprehensive analytical support, cross-referencing the dataset to help identify connections.”
The agency also helped track down 45 individuals using “travel intelligence.”
Europol said it set up a virtual command post to coordinate the field officers conducting the searches.
The Camorra is an umbrella term for mafia groups based in Naples and it is not known which of the 111 Camorra clans were involved.
The term Cosa Nostra, translated as “Our Thing,” refers to all Sicilian mafia groups, which still have connections with Italian American mafia families in the United States.
