The Directorate for Combating Organised Crime, through the Hellenic Police’s Directorate of Police Cooperation, has sought to freeze two bank accounts in Ireland and Denmark as part of an ongoing investigation into a major tax-fraud and theft case involving the Choriatiko bakery chain and other businesses run by its 58-year-old owner, who is accused of leading the criminal organisation.
The accounts are in the names of two foreign women who have not been arrested. One has fled to Romania and the other to Germany. The accounts were linked to POS terminals at the businesses in Greece and were used to launder illicit funds amounting to many millions of euros.
According to the investigation, the money laundering was carried out by transferring funds from the accounts above to Greece as payments from abroad, then using the money to buy property, tourism businesses and other assets.
According to reports, about €6,000,000 has been found in these accounts, but the total is estimated to be much higher, as the parallel investigation by the anti-money laundering authority into other accounts and safe-deposit boxes is ongoing.
The scheme was meticulously organised: the group relied on a wide network of front men (more than 100) to set up and close companies, buy property and bid exorbitant amounts at auctions for beach concessions, mainly on Rhodes, before closing the companies and leaving behind huge debts. At the same time, it operated hundreds of businesses in a similar way.
Remarkably, it had managed to control 28 beach concessions on Rhodes alone. Because of its activities on the island, 14 of the 59 people charged so far were arrested there.
More specifically, according to the findings of the police investigation to date, the criminal organisation operated 433 businesses, mainly in Attica, Rhodes and Mykonos. Of these, 340 were food and entertainment businesses, ranging from bakeries to cafes, coffee bars, entertainment venues, nightclubs and strip clubs, covering virtually every segment of the market. The rest included staff-leasing companies and other businesses.
The entire network of businesses was run from the organisation’s headquarters in Attica, where an informal accounting office co-ordinated its operations from within the premises.
There was also a specialist accounting firm based off-site, with branches on Mykonos and Rhodes. The network’s modus operandi also involved a wide network of more than 100 front men and a close-knit team supporting the organisation. Team members had specific roles, including overseeing business operations, setting up legal entities and paying the front men.
It is worth noting that the organisation secured front men by paying them a monthly salary of about €1,000. They were people on low incomes and with health problems. The group also listed non-existent people or deceased individuals as managers of some businesses.
The 58-year-old, accused of masterminding the fraud, then used his accounting offices to set up IKE companies in the front men’s names, without their knowledge. He opened bank accounts and set up businesses that were run behind the scenes, exclusively by other members of the organisation, for the leader’s benefit.
The main aim, police sources said, was to avoid obligations to the state, with any legal or civil consequences falling on the front men.
Over the decade covered by the investigation, the organisation systematically failed to pay amounts totalling about €120,000,000, including:
- About €38,800,000 in employer contributions to EFKA.
- About €38,000,000 in debts from state repayable advances and payroll taxes.
- About €43,000,000 in undeclared taxable amounts (VAT, income tax, etc.).
It is worth noting that the organisation used different methods depending on the type of business, always with the primary aim of avoiding its obligations to the state. Examples include:
1. Businesses operating under beach leases from the Public Property Service and ETAD.
The organisation took part in auctions for beach leases, submitting bids that made the leases uneconomic for other interested parties. For example, it would secure a beach with a starting price of €100,000 for €1,000,000 over three years, through a company operating in the names of front men.
It would then usually pay the first instalment and make no further payments over the next three years. In the final year, the debts would be assessed by the relevant tax office and the company would be evicted at the municipality’s proposal. At the same time, however, the criminal organisation would suspend the company’s operations, leaving the front man with the debts.
Later, it would enter another auction through a different legal entity and a different front man, repeating the same process. Other debts that accumulated under the legal entity, such as unpaid EFKA contributions, also ended up with the front man, who had no assets at all, leaving the state unable to collect a single euro.
2. It secured beach concessions at sites it wanted for 10 years, then sublet them to companies.
To conceal the money, it used bank accounts at banks abroad, including in Iceland and Denmark, which were linked to the businesses’ POS terminals. The money was then transferred to companies managed by senior members of the criminal organisation and presented as income from abroad. This was followed by purchases of property, land, vehicles, investment products and other assets.
SOURCE: ANA