Massive EU COVID fund fraud: 22 held, assets worth 652 million dollars recovered

Italian authorities announced on Thursday that they had apprehended 22 individuals and confiscated assets totaling over 600 million euros ($652 million) in connection with a probe into suspected fraud linked to European Union and Italian financial aid programs.

According to finance police in Venice, the group, operating across several European nations, allegedly aimed to deceive the European Union's COVID pandemic recovery fund and Italy's generous home improvement initiatives.

Lavish assets seized

The seized assets included residential properties, luxury watches like Rolexes, Cartier jewelry, gold, digital currencies, and high-end vehicles such as Lamborghinis and Porsches. Additionally, the authorities identified around 600 million euros in fraudulent tax credits related to home renovations.

Law enforcement officers arrested three individuals in Slovakia, two in Austria, and 17 across Italy, while conducting searches in Romania.

This investigation raises concerns about the susceptibility of both the EU's Recovery and Resilience Facility (RRF) and Italy's domestic construction programs to exploitation by fraudulent actors.

Complex fraud tactic

Italy has received nearly 102 billion euros from the EU COVID recovery funds, with additional funds anticipated through 2026. Simultaneously, the government is allocating significant sums for construction projects, including initiatives offering financial incentives for energy-saving renovations and facade improvements.

The suspects, whose identities were not disclosed, purportedly devised intricate fraud schemes utilizing front companies to submit fictitious projects and obtain tradable tax credits from the government. Following the completion of the fraudulent activities, the group allegedly established a money laundering network, incorporating cloud servers in uncooperative jurisdictions and cryptocurrencies.

Collaboration with EPFO

Italian authorities collaborated with the European Public Prosecutor's Office (EPPO) in this investigation, which is responsible for combating crimes affecting the EU's financial interests.

According to EPPO's annual report released in February, the agency had nearly 2,000 ongoing investigations in 2023, involving approximately 19.2 billion euros in suspected fraud, with Italy accounting for a significant portion of these investigations.