Accused of Carousel Fraud – Seeking CoE intervention to overturn asset-freezing ‘Vourliotis Provision’

Some of the 267 stars of “Carousel” arrested by Vourliotis for damaging the EU and the Greek State with 514,711,348 euros from cross-border fraud have appealed to the CoE.

What the executives of “Carousel”

Some of the 142 individuals and 125 companies involved in the big “shell” or “Karousel” fraud and “arrested” by the chairman of the Anti-Money Laundering Authority, former deputy prosecutor of the Supreme Court, Charalambos Vourliotis, have appealed to the Administrative Justice.

A total of 267 companies and individuals are alleged to have caused financial losses of €514,711,348 by not paying VAT and intra-community VAT, benefiting €123,530,723, thus committing cross-border fraud.

The 142 natural persons appear to participate in the 125 companies in various capacities, such as shareholders, managers, managing directors, and so on.

Someone is also involved in several companies at the same time.

The companies, as a rule, are one-person capital companies, allegedly having their headquarters, apart from Attica, in various cities around Greece (Thessaloniki, Ioannina, Kozani, Corfu, Messolonghi, Chalkida, etc.). The scope of their work is diverse, such as construction, technical, transport, car trading, etc.

At the same time, by order of Mr. Vourliotis from September 16, 2024, the bank accounts, bank accounts, bank accounts, shares, etc., have been frozen up to the amount of the financial loss, i.e. 514,711,348 euros of the 142 individuals and 125 companies involved.

First of all, it is necessary to clarify that for some time now, financial frauds of the “disappearing trade” (“carousel”) or “shell companies” or zero “physical presence” type have been taking on alarming proportions.

All of these cases are a common fraud scheme, the so-called “absentee trader”, also known as “chain fraud”, in which goods are bought and resold without VAT ever being paid.

The most common fraud practice is the “carousel” type, in which goods cycle between various companies within the European Union and Greece (cross-border activity), and at some point the company that has not paid the VAT paid by consumers “disappears”.

Now, Mr. Vourliotis in his decree for the 267 states that “they are developing joint and coordinated action, referring to an organised plan, to avoid paying VAT, income tax and other withholding and imposed taxes, fees or social security contributions, by misleading the tax administration by representing false facts as true or by fraudulently concealing or disguising facts, succeeding in not paying or paying incorrectly or in offsetting the respective amounts, with the final result of their illegal appropriation’.

In this particular case, the companies appear to carry out multi-million euro transactions “involving legal entities whose characteristics and methodology of action are reminiscent of a ‘shell company’ or ‘disappearing trader’ typology, used in virtual transactions and VAT carousel fraud schemes”.

They thus manage “on the one hand to balance the VAT derived from sales by presenting in the respective periodic declarations false VAT amounts of outputs and inputs, and on the other hand not to reflect the actual obligation to pay VAT to illegally appropriate it, as well as the amounts corresponding to tax, insurance and other obligations”.

In particular, “this action achieves the transfer of the obligation to pay VAT to other companies in the circuit, for which there are strong indications that they were set up, right from the start, to join the cycle of commercial transactions to assume the obligation to pay VAT, as well as the corresponding tax and insurance obligations, and then disappear”.

They escaped to the State Council

Following this, some of the 267 has appealed to the CoE, seeking the annulment of Mr. Vourliotis’ order No. 134/16.9.2024, arguing, on the one hand, that it violates the constitutional principle of equality and, on the other hand, that it is illegal, as it is unjustified and unsubstantiated.

As regards the violation of the constitutional principle of equality, they argue that the contested provision which imposed the freezing of all assets up to the amount corresponding to the proceeds of crime, i.e. up to the amount of EUR 123,530,723, is excessive and goes far beyond the legitimate purposes of imposing the measure of freezing assets.

The freezing of the amount made by the “Vourliotis decree”, they point out, is more than several times the turnover of the companies that have appealed to the CoE, so it is exhausting and leads to the complete inability of the 125 companies to operate.

Moreover, they note, that it is impossible that they have made transactions amounting to 514,711,348 euros and have not paid VAT of 10,888,386 euros, while the turnover of these companies does not exceed the amount of 400,000 euros during the period in question.

They also point out that, yes, the Authority “may impose the onerous measure of freezing assets, based on suspicions and in the absence of evidence, but this makes it all the more imperative to check compliance with the constitutional principle of proportionality so that the appropriate balance is struck between protecting the rights of the person administered and pursuing the legitimate objective.”

The “Vourliotis provision”, according to the applicants, lacks reasoning, as it “does not set out essential elements of the crimes which they are alleged to have committed”.

Further, “it does not indicate with which of the 141 individuals and 125 companies they have, in any way, cooperated, namely by concerted action, organised plan and intention to commit offences”.

Accordingly, they note, the version of their involvement in all the companies under investigation is “not only unproven but also logically unsubstantiated.”

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