Moby Dick Operation: Major Blow to VAT Carousel Fraud Ring
In a significant operation dubbed “Moby Dick”, the European Public Prosecutor’s Office (EPPO) has issued approximately 40 arrest warrants and seized assets worth €520 million. This move comes as part of efforts to dismantle a €1.3 billion EU-wide VAT carousel fraud ring that has allegedly involved the Italian mafia and the fabrication of invoices.
Impact of Organized Crime on EU Budget Fraud
The Moby Dick operation is a pivotal investigation for the EPPO, bringing to light the severe involvement of perilous organized crime groups in EU budget fraud. This type of crime not only inflicts colossal financial damage but also poses a significant threat to internal security. The operation’s success provides a clear message that the realms of white-collar crime and violent criminal activity are not as separate as they may seem. This operation is a blow to both sectors.
Investigating the Fraud Ring
Investigations have shown that this criminal association has been involved in VAT fraud in the IT trade and profit laundering, issuing false invoices amounting to €1.3 billion. The operation has extended beyond Italy, with searches and seizures taking place in eight other EU member states, Switzerland, and the United Arab Emirates. Arrests have been made in the Czech Republic, the Netherlands, Spain, and Bulgaria.
Government Response and Impact
Italian Prime Minister Giorgia Meloni has praised the investigators, emphasizing the government’s dedication to combating tax evasion, which costs Italy an estimated €80 billion annually. The judge overseeing the case in Milan has ordered the preventive seizure of assets surpassing €520 million, citing aggravating circumstances for aiding mafia criminal associations.
Understanding VAT Carousel Fraud
VAT carousel fraud is a costly issue, draining almost €50 billion from the EU each year, according to Europol estimates. This type of crime involves multiple businesses based in at least two EU Member States and revolves around obtaining a refund or deduction of VAT on an intra-Community supply of goods when this VAT has not been paid to the tax administration.
Unprecedented Criminal Syndicate
The criminal syndicate involved in this case demonstrated a high level of complexity and efficiency, issuing invoices for the sales of electronic products totaling more than €1.3 billion between 2020 and 2023. The suspects established companies within and outside the EU to sell goods through a fraudulent chain of traders, who then disappeared without fulfilling their tax obligations, thus exploiting EU rules on cross-border transactions.
