EPPO: Four members of Romania-based crime group with mafia ties charged with EU funding fraud

The European Public Prosecutor's Office (EPPO) in Bucharest announces having filed charges against four suspects believed to be part of a criminal ring with ties to Italian mafia groups, in a case of an EUR 4.3 million subsidy fraud involving EU and national funds.In a statement this Tuesday, EPPO said that allegations are that the defendants formed a criminal group with other suspects to provide false letters of guarantee to awardees of EU-funded projects, which claimed to insure the projects against potential damages. In exchange for issuing the letters, the suspects are understood to have collected large amounts of money. According to the prosecutors, the suspects are believed to have carried out this fraudulent scheme in the name of companies registered in Czechia and Latvia, which did not have the right to issue letters of guarantee, nor the financial resources to cover the insured damages.The use of these documents resulted in an illicit gain of approximately EUR 4.3 million, most of the amount coming from the European Regional Development Fund, the European Agricultural Fund for Rural Development and the Regional Operational Programme.The move of EPPO Bucharest is the result of several investigations into criminal schemes using the same modus operandi, following house searches conducted in Romania and France in May 2023. Earlier, in 2023, other suspects were charged and are currently awaiting trial. Also, EUR 450,000 worth of assets were seized.If found guilty, the defendants face between four and 15 years of imprisonment.Based on the principle of loyal cooperation, the EPPO has alerted the Romanian Ministry of Investment and European projects about the existence of possible vulnerabilities in the management of European funds, which result in a significantly low level of protection of EU's financial interests in Romania.According to the operation methods identified in several cases, the elements that generated a high risk of fraud in EU-funded contracts consisted in the use of letters of guarantee issued by fictitious entities, or that didn't have the right to issue such documents. The bogus documents helped the fraudsters win several public award procedures, and consequently EPPO opened several investigations therein.