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(Luxembourg, 18 June 2024) – An investigation by the European Public Prosecutor’s Office (EPPO) in Bologna (Italy), code-named ‘Stop the Carousel’, has led to the arrest of three suspected ringleaders of a criminal organisation created to obtain funds from the Recovery and Resilience Facility (RRF).
Based on the evidence, the suspects created companies or took over inactive ones, in order to fraudulently apply for RRF funds. The companies did not have physical offices and had not submitted the required tax returns, some for more than 20 years.
It is alleged that the suspects created, with the help of an accountant, a paper trail showing revenues in the millions, by registering false financial statements online at Italy’s Company Register (Registro Imprese). They then submitted a series of requests for funding, ostensibly to internationalise the companies, develop e-commerce or to enter foreign markets. These requests – some of which involved in part non-repayable funds – were submitted to SIMEST, Italy’s financial institution for the development and promotion of the activities of Italian companies, and responsible for managing and distributing RRF funds.
The suspects obtained an initial payment of approximately €490 000 of funding, and this money was immediately diverted from the companies’ bank accounts, through systematic cash withdrawals from ATMs, or bank transfers to the accounts of other individuals or companies. It is understood that the suspects expected this ‘carousel’ of ‘letterbox companies’ to produce millions in illicit revenues.
The investigation uncovered at least 15 instances of aggravated fraud to obtain public funds (both committed and attempted), involving requests for public funding amounting to €15 million, mostly from letterbox companies in the provinces of Ravenna and Bolzano. The timeliness of this investigation prevented the disbursement of up to €15 million worth of EU funds by SIMEST.
In addition to the three suspects arrested, a fourth individual, suspected of producing false balance sheets, was suspended from the exercise of the profession of certified accountant. These coercive measures, issued by the judge for preliminary investigations of the Court of Pesaro, were executed by the Italian Financial Police (Guardia di Finanza) of Pesaro.
Law enforcement agents also carried out searches in the province of Salerno, at the suspects’ homes and offices, using ‘cash dogs’ – canine units specialised in searching for currency – and seized assets of the suspects worth €490 000, in order to compensate the damage to the EU budget.
All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.
The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.