Court of Milan: EPPO Moby Dick VAT Fraud Convictions Secure €300M Confiscation

• Six individuals, including a ringleader, were convicted by the Court of Milan for transnational criminal association, VAT fraud, and money laundering.
• The 'Moby Dick' investigation, led by the EPPO, uncovered a VAT carousel fraud scheme that caused €520 million in losses to EU and national budgets.
• The syndicate issued over €1.3 billion in invoices for electronic goods between 2020 and 2023, with one defendant linked to a Camorra clan for money laundering.
• Prison sentences ranged from four years to seven years and two months, alongside a confiscation order exceeding €300 million in profits and assets.
• Aggravated circumstances included aiding a mafia association, prompting the EPPO Chief Prosecutor to highlight the critical need for EU anti-fraud efforts.

Laura Kövesi, the outgoing European Chief Prosecutor, emphasized the broader implications of these convictions, stating that they confirm the EPPO's long-standing warnings about mafia organizations investing in VAT fraud as a primary vehicle for money laundering.

The Court of Milan in Italy has delivered significant convictions in the 'Moby Dick' investigation, a probe led by the European Public Prosecutor’s Office (EPPO) into a vast transnational VAT carousel fraud scheme. On September 11, 2026, six individuals, including a primary ringleader, were found guilty of charges encompassing transnational criminal association, VAT fraud, and money laundering. These recent verdicts follow initial convictions announced in February of the same year, marking further progress in dismantling a sophisticated criminal network.

The illicit operation caused an estimated €520 million in losses to both EU and national budgets. The syndicate generated invoices for the sale of electronic goods, including AirPods and laptops, totaling over €1.3 billion in value between 2020 and 2023. The judge presiding over the preliminary hearing also ordered the confiscation of more than €300 million in assets, alongside confirming aggravated circumstances due to the syndicate's direct involvement with and use of methods associated with a mafia association.

One of the convicted ringleaders had been at large for six months after evading arrest in Prague, Czechia, in November 2024. He subsequently surrendered in May 2025 and has remained under judicial restrictions since that time. Another defendant was specifically identified as responsible for receiving funds from a Camorra clan, which were then invested into the criminal enterprise. This infusion of mafia money not only amplified the syndicate's profits but also served as a mechanism for laundering illicit proceeds.

The 'Moby Dick' investigation uncovered a complex VAT carousel fraud scheme orchestrated by a criminal syndicate structured into federated operational cells. These cells extended their activities across numerous European and third countries, utilizing a sophisticated network of domestic and foreign companies. This network included 'missing traders,' brokers, and conduits, all designed to facilitate the massive tax evasion.

The prosecution's detailed reconstruction of this intricate criminal organization was largely accepted by the judge. The broader investigation, which combined two separate lines of inquiry initially conducted by the Italian Financial Police (Guardia di Finanza) of Varese and Milan, and the Italian State Police (Polizia di Stato) — including the Palermo Mobile Squad, SISCO, Central Operational Service, and Palermo PEF Unit — involves more than 400 individuals and legal entities as suspects. Some parties affected by seizure orders have already settled their outstanding debts with tax authorities following the investigation's findings.

The six defendants, who all requested to be tried under an abbreviated procedure, received reduced prison sentences ranging from four years to seven years and two months. This reduction amounted to one-third of their original sentences. In addition to incarceration, accessory penalties were imposed; some defendants were permanently barred from holding public office and legally incapacitated for the duration of their sentences, while others faced a five-year ban from public office. One individual was further disqualified from operating a commercial enterprise and holding executive positions in companies.

The confiscation order of over €300 million specifically targeted profits derived from the criminal activities, as well as real estate and company shares owned by the defendants. Laura Kövesi, the outgoing European Chief Prosecutor, emphasized the broader implications of these convictions, stating that they confirm the EPPO's long-standing warnings about mafia organizations investing in VAT fraud as a primary vehicle for money laundering. She underscored the significant damage inflicted on national and EU budgets by such schemes, advocating for the fight against VAT fraud to become a priority and a cornerstone of the new EU anti-fraud architecture.

This case underscores the EPPO's aggressive enforcement against transnational VAT carousel fraud, particularly when linked to organised crime. Lawyers and compliance officers should advise clients on enhanced due diligence and internal controls to mitigate exposure to such schemes, given the severe penalties and confiscation orders being imposed.

Source: Original reporting via European Public Prosecutor’s Office