FinCrime Central - Latest AML/CFT News & Vendor Directory

23 Convicted in €2.9B VAT Fraud as Part of EPPO’s Operation Admiral

This image is AI-generated.

Portugal’s Central Criminal Court in Lisbon delivered a landmark verdict on 12 May 2025, finding 10 individuals and 13 companies guilty of masterminding one of the largest international value-added tax (VAT) frauds ever prosecuted in the European Union. Known as Investigation Admiral, this scheme saw electronic goods traded across borders to evade VAT liabilities now estimated at €2.9 billion. These convictions represent the first judicial outcome of an expansive, cross-border inquiry that remains active under the European Public Prosecutor’s Office (EPPO) framework.

Three principal organizers received substantial prison terms for VAT fraud, money laundering, corruption and document forgery: seven years, eight years and seven years six months respectively. Although acquitted of participation in a criminal organization, their convictions may still be appealed. A fourth defendant, responsible for recruiting straw-men directors and overseeing fictitious import–export operations used to launder proceeds, was sentenced to five years’ imprisonment.

Six additional individuals were convicted exclusively for money laundering. Four company managers and one spouse of a main perpetrator received suspended three-year sentences under conditional regimes. A bank employee who deliberately breached anti-money laundering rules in exchange for financial gain was handed a suspended four-year term for private-sector corruption and laundering offences.

All 23 convicted parties face joint confiscation of €80,076,336.75, representing losses to both Portugal’s treasury and the EU budget. Seized assets—from real estate holdings and corporate bank balances to vehicles—were ordered forfeited, except for two third-party pension funds and €320,318.25 deemed legitimately obtained.

Scheme Structure and Modus Operandi

Investigation Admiral laid bare a classic carousel fraud: electronic goods (smartphones, computer components) were bought and sold among a chain of shell companies that existed only on paper. Phantom firms in Portugal, the Baltics and elsewhere issued export invoices but never remitted the VAT collected to national tax authorities. Instead, the same goods circulated through successive entities, each claiming fraudulent VAT refunds.

This mechanism exploited provisions of the EU VAT Directive—zero-rate intra-Community supplies and input VAT reimbursement—while obscuring the identity of ultimate buyers through nominee directors and fictitious invoices. Complex inter-company transfers and layered bank transactions effectively masked audit trails, allowing the syndicate to evade detection by tax administrations across multiple member states.

Sentences and Corporate Penalties

Under Portuguese criminal law, aggravated VAT fraud carries hefty terms, while money laundering, corruption and forgery incur further custodial penalties. In parallel, the 13 corporate entities used to facilitate the scheme were also sanctioned: two firms fined €16,000 each and dissolved, the remainder struck from the commercial registry.

These organizational sanctions send a clear signal: dismantling the legal vehicles behind large-scale fraud is as crucial as prosecuting individual conspirators. Corporate dissolution combined with asset confiscation restores integrity to the single market by removing fraudulent competitors and deterring future abuses.

Expanding Investigation and EPPO Model

This Portuguese trial represents only Chapter 1 of the EPPO’s flagship Admiral inquiry. Subsequent phases—Admiral 2.0 and Admiral 3.0—have uncovered analogous networks in the Baltic states and Greece, each reusing core infrastructure: nominee directors, spreadsheet templates, communication channels and bank accounts. Coordinated actions by local EPPO delegates have led to arrests, asset freezes and evidence gathering in multiple jurisdictions.

Regulation (EU) 2017/1939 established the EPPO as a decentralized prosecution office: European Delegated Prosecutors embedded nationally conduct investigations with autonomy, while central analytical units in Luxembourg provide forensic accounting, data-mining and cross-border pattern analysis. Investigation Admiral exemplifies this hybrid model’s strength, pooling resources to tackle transnational financial crime that once exploited fragmented enforcement.

Conclusion

Portugal’s Central Criminal Court has set a powerful precedent against large-scale VAT fraud with the first convictions under Investigation Admiral. By uniting national prosecution services, sophisticated analytics and robust legal instruments, the EPPO is dismantling complex carousel schemes that threaten EU financial interests. As trials continue in the Baltics, Greece and beyond, these verdicts reinforce a zero-tolerance approach: cross-border VAT fraud will carry serious consequences and stolen funds will be recovered.

Source: EPPO

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools.

Follow

23 Convicted in €2.9B VAT Fraud as Part of EPPO’s Operation Admiral

Table of Contents