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Charges in Highly Organized Tax Fraud Case

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Charges in Highly Organized Tax Fraud Case

Money - Icelandic Króna

Photo: Páll Kjartansson

The Icelandic State Prosecutor has charged eight individuals, suspected of major tax evasion by defrauding the state of ISK 278 million (USD 2.3 million, EUR 2 million), Vísir reports. The suspects are charged for requesting a refund of value added tax, for which there was no basis. The suspects include six men and two women.

One of the people charged worked for the Directorate of Internal Revenue at the time. The case is one of the largest of its kind in Iceland and has been under investigation by police and the state prosecutor for more than five years. The investigation was comprehensive and included numerous house searches.

The case came up in September of 2010. The people established fake firms for the sole purpose of defrauding the tax system. They had no actual operation, but were said to be involved in the construction of three houses in the capital area, which were never built. The suspect who worked in the value added tax division of the Directorate of Internal Revenue approved the applications of two firms in connection with construction projects, according to RÚV.

The suspected ringleader left for South America shortly before the revelations and arrests were made in 2010. He was later arrested at Santiago Mariño Caribbean International Airport on the island of Margarita in Venezuela.

RÚV reports today that the fraudulent activity was very well organized. Most of the funds stolen from the state were given to an unnamed individual, who is not among the arrested suspects, and those funds haven’t been found. The charges indicate that in some cases, the suspects kept tens of millions of ISK in their homes, and one suspect is said to have shown up at a bar in Kópavogur with ISK 17 million (USD 139,000, EUR 121,000) in a bag.

One of the ringleaders is charged with making four of the suspects authorized signatories for the fake firms. Those people made 196 trips to the bank to withdraw cash. The ringleader is said to have received ISK 278 million in cash, which he stored for a while, but then delivered to an unnamed individual.

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