The City

Over €100 Million VAT Fraud in Monaco: Four Men Sentenced

July 08, 2024
Over €100 Million VAT Fraud in Monaco: Four Men Sentenced

Palais de Justice - ©

Four men have been sentenced for orchestrating a VAT carousel fraud involving Monaco-based companies in the early 2000s. The total damage to the State: €107 million.

After a fifteen-year investigation culminating in a two-day trial in late February, the Monegasque justice system has delivered its verdict in a complex VAT carousel fraud case dating back to the 2000s.

Four men were brought before the criminal court, charged with defrauding the Monegasque state of more than €107 million. Among them, Khanh Long C (absent from the hearing), Willy J., and Michel N. had previous convictions for carousel frauds, while Clément F. had a clean record.

Using import-export companies based in Monaco, they were accused of participating in a fraudulent scheme involving other European companies—often shell companies with no logistical structures. These companies repeatedly "transited" electronic components, which were often non-existent and uninsured.

Money transfers through accounts in Hong Kong, known for its limited judicial cooperation, added opacity to the scheme, making it difficult for investigators to trace the beneficiaries.

Two distinct systems were uncovered: one involving the Monegasque companies "Miroil/Jea-Fra" and another, more significant one, centered around "Tekworld." Michel N. revealed this second scheme to a French investigating judge, implicating Clément F. and Willy J., who in turn accused him of being the mastermind.

Willy J. received a six-month suspended sentence, with judges viewing him more as a participant than a ringleader. The other three were sentenced to 18 months suspended, a far cry from the prison terms sought by the prosecutor general.

The court found Michel N. had actively set up the financial circuits for both Jea-Fra, where he was the real economic beneficiary, and Tekworld. Clément F. and Willy J. later adopted and operated the latter fraudulent scheme.

While the court recognized Clément F. as an opportunist rather than a habitual offender, the frauds he committed caused the most significant loss to the Monegasque state.

All four were placed under a five-year probationary regime, with an obligation to compensate the victims. The court ruled that the fraudulent operations allowed the defendants' companies to claim VAT deductions through fictitious sales. Khanh Long C. was ordered to pay the Monegasque state over €758,000, and Michel N. over €2 million.

Clément F. and Willy J. were jointly ordered to pay €104.6 million to Jean-Paul Samba, the liquidator of SAM TekWorld. Since the state had filed its claim in the collective proceedings, it could no longer directly pursue the debt due to the suspension of individual claims. However, given the astronomical sums involved, full recovery by the state is unlikely.

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