Last week, a 68-year-old man and a 72-year-old woman stood before the Amsterdam court during several hearings. The man is suspected of creating and using false invoices for over 50 million euros and laundering nearly 1.5 million euros between January 2017 and October 2023 in the Netherlands and Germany. He is alleged to have run a so-called false invoice factory for various clothing traders. Furthermore, after his arrest, the man continued to run a new false invoice factory, leading to his re-arrest in 2023. The woman is being prosecuted for laundering the proceeds from the false invoice factory, amounting to nearly 700,000 euros. The Public Prosecution Service demands a custodial sentence of 5 years and 6 months for the man and 4 months of imprisonment and 180 hours of community service for the woman.
Refined Approach
The case primarily revolves around the 68-year-old male suspect. From January 2017, he facilitated Dutch entrepreneurs in the clothing industry in unlawfully deducting VAT on their purchases made elsewhere in the EU. The clothing traders directly purchased clothing without VAT from suppliers in Italy and Paris. The suspect issued false invoices with VAT on behalf of at least ten different Dutch shell companies. These companies were not linked to the suspect on paper. In reality, it was not the suspects ten companies that supplied the clothing traders, but the foreign suppliers.
The VAT charged was deducted by the clothing traders in their VAT returns, allowing them to effectively purchase the clothing at a lower price. The suspect received a fee of 7 to 8% from the clothing traders. He recorded false Dutch purchase invoices from so-called second-tier companies in the records of the first-tier companies, allowing the first-tier companies to avoid paying VAT. Based on the false invoices, he received millions of euros in the bank accounts of his affiliated companies.
In total, there was a cash flow of over 50 million euros in false invoices. The tax authorities calculated a tax shortfall of more than 10 million euros. By transferring money to other accounts, withdrawing cash, and using it to purchase cars and a house, the suspect is also alleged to have laundered nearly 1.5 million euros. The female suspect is suspected of benefiting from the proceeds of the false invoice factory, as she lived in a house in Germany and used cars purchased with these criminal proceeds.
Serious Form of Fraud
During the hearing, the public prosecutor emphasized the seriousness of the case: “First and foremost, this form of fraud leads to significant financial damage to the taxpayer. This involves lost tax revenues that must ultimately be compensated by other, well-meaning citizens to balance the budget. Money for building roads, money for education, money for healthcare, and we now also include defense. All things that the suspects benefit from but do not contribute to. In this case, the fiscal damage from VAT fraud exceeds 10 million euros. A significant loss.” Additionally, there has also been market disruption. Bona fide clothing companies found it harder to lower their purchase prices because they could not compete with the lower selling prices that the clothing traders could offer due to the suspects scheme. The Public Prosecution Service demands a custodial sentence of 5 years and 6 months for the male suspect. The female suspect faces a custodial sentence of 4 months and a community service of 180 hours. Additionally, the Public Prosecution Service has an asset seizure claim of 1,760,765 euros from the male suspects unlawfully obtained benefit. An asset seizure of 240,072 euros is also in question for the woman. Six clothing traders will have to account in court at a later date.
The court will deliver its ruling in six months.