Czech police lay charges over massive tax evasion scam

Tax dodging, other charges filed over what by police describe as among the most complex tax-evasion probes ever carried out

Society
Chris Johnstone | 24.02.2012

Czech police say they have drawn up charges against 14 people, including a top tax administration official and two co-workers, in one of the most complicated tax evasion cases they have ever tackled.

Charges of tax evasion, misuse of a public position, taking and giving bribes, falsifying documents and use of criminal proceeds have been filed with the Supreme Prosecutor’s Office in Prague, the special police division for uncovering corruption and financial crime (ÚOKFK SKPV) announced on Friday. The total financial damage from the fraud is estimated at Kč 630 million. Total financial damage from the fraud is estimated at Kč 630 mln.

The core group of suspects is believed to have set up a trading, and later advertising firm, and then tried to avoid paying taxes on the high revenues earned through the use of false bills for totally fictive services and goods. The trail was covered up using a series of different bank accounts, which the police eventually succeeded in mapping out. Cash flows through these accounts came to more than Kč 1.0 billion, police said.

‘The case is historically one of the most difficult tax dossiers we have dealt with as regards the highly sophisticated and organized way in which the criminal acts were committed and which reached up into the higher levels of public administration.’

Police investigations showed that one of the suspects used his close contracts with a high placed tax official to cover up the evasion. In return, the official was found to have been offered cheap use of a holiday apartment, millions of crowns were channeled to a sports club where he was active, and a police found shares worth Kč 15 million when they carried out a search of his home.

Further probing showed that the top tax official had signed up two subordinates to also take part in the tax fraud and other criminal operations. All three are among the 14 facing charges.

The police case against the suspects comes to 26,000 pages, the police division said in a statement. “The case is historically one of the most difficult tax dossiers we have dealt as regards to the highly sophisticated and organized way in which the criminal acts were committed and which reached up into the higher levels of public administration,” it added.

Investigations were started in 2008 and widened to cover a further six suspects in 2010 and 2011. The suspects could face prison sentences of up to 10 years. 

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