A new daedalian tax evasion fraud scandal in hospitality has emerged in Greece within weeks from the uncovering of the distinct high-profile cases of Pizza Fan restaurants and Choriatiko bakeries.
The newly uncovered criminal ring had allegedly accumulated over 200 million euro debt to the Greek state, utilising hundreds of desperate patients as frontmen in over 2,000 ghost companies and 4,200 tax IDs within a 3-year period.
18 persons were arrested on Saturday, November 7, following months of secret investigation conducted by more than 60 auditors of the Independent Authority for Public Revenue (AADE) and 7 coroner’s officers.
Among the arrested are renowned nightclubs owners, active primarily in the wider areas of Thessaloniki and Halkidiki, as well as a celebrity actor, while a lawyer and three accountants also held key positions in the criminal ring.
Popular Greek nighclubs and renowned businessmen involved in tax fraud scheme
More than 2,000 businesses in the food service and nightlife sectors at 700 venues across Thessaloniki, Halkidiki, and the rest of Greece, 1,300 frontmen and 700 secret operators, are involved in the fraud, according to AADE’s shock announcement.
Following a months-long investigation, the auditors identified the actual business owners who were conducting these operations while remaining hidden behind individuals who were nominally listed as the managers and sole partners of the enterprises.
The 18 arrested are well-known figures in the nightlife industry, who own dozens of highly popular bars and nightclubs in Thessaloniki and Chalkidiki, AADE said.
Criminal ring recruited patients in need as frontmen
According to the investigation’s findings, the criminal ring recruited desperate patients with serious health issues as frontment for ghost companies.
The recruitment took place most notably outside the country’s top cancer treatement hospitals, the Theageneio Hospital in Thessaloniki and the Agios Savvas Hospital in Athens. The fraudsters would approach patients and persuade them, in exchange for a small payment, to pose as company managers. These frontmen had no actual involvement in the operation of the businesses, which existed solely to incur debts that were never intended to be repaid.
The criminal activity is estimated to have cost the Greek state €68 million in VAT and income tax owed to the AADE, and €135 million in social security contributions owed to the Unified Social Security Fund.
How the lawyer and accountants enabled the tax evasion scheme
Three accountants and a lawyer played a focal role in the operation of the tax evasion scheme, AADE discovered.
The four of them allegedly organized the registration of the companies and managed the frontmen. The lawyer, in specific, used forged authorizations to facilitate criminal acts, enabling the businesses to secure permits from the municipality, the fire department, and health authorities.
The luxurious lifestyle of those involved is illustrated by their exotic trips to faraway destinations, photos from which were posted on social media.
Weapons, expensive watches, and cash were discovered in sumptuous villas belonging to one of the arrested businessmen.
The actor arrested in the operation confessed that he served the scheme as a frontman for a monthly payment ranging from 200 to 700 euro.
