Europe: luxury cars and watches are seized in Covid fraud scheme

Police arrested 22 people and seized assets worth more than $650 million in connection with alleged fraud linked to the European Union's (EU) post-pandemic recovery fund.

Following an investigation by the EU prosecutor, eight people were detained, 14 were placed under house arrest and two others were prevented from practicing their profession. The arrests took place in Italy, Austria, Romania and Slovakia.

Italian financial police said on Thursday that they seized Lamborghinis, Porsches, Rolex watches, Cartier jewelry, cryptocurrencies, luxury villas and other items during dozens of raids on homes and offices.

The alleged fraud is likely to renew concerns about the misuse of the EU's $850 billion recovery fund to help revive the bloc's economy. Italy was the biggest beneficiary of the fund, with grants of more than 194 billion euros.

The European Public Prosecutor's Office (EPPO) said a criminal organization is suspected of running a fraud scheme between 2021 and 2023 to scam recovery packages from Italy.

In 2021, the group applied for non-refundable grants, the EPPO said, ostensibly to support small and medium-sized businesses, but then prepared false balance sheets “to show that the companies were active and profitable, while in fact they were non-active and fictitious companies.”

After obtaining about $650 million in funds from the National Recovery and Resilience Plan (NRRP), the group transferred the funds to its bank accounts in Austria, Romania and Slovakia, the EPPO said.

The prosecutor's office alleged that the group used cryptocurrencies, artificial intelligence and offshore cloud servers to carry out and conceal the fraud.

The United States has also attempted to crack down on alleged fraud involving Covid-19 relief resources.

A federal agency warned in June that the Small Business Administration distributed more than $200 billion in potentially fraudulent funds post-pandemic.