Modena – A devastating blow to the system of illicit outsourcing in the food sector. The Modena Financial Police have executed a precautionary seizure order for over €8 million, bringing to a halt a criminal organization accused of systematic tax fraud in the meat processing sector. The operation involves 12 suspects and nine companies, with prohibitory measures that removed the two main promoters of the syndicate from their top management.
The mechanism: a “hub company” and eight paper mills
The investigation, coordinated by the Modena Public Prosecutor's Office, revealed a complex but well-established corporate structure. At the heart of the system was a "hub" company with facilities in the provinces of Modena and Parma, supported by eight "paper mills" located in Emilia and Campania (Naples and Caserta).
The mechanism was the unfortunately well-known one of fake contracts: the paper companies supplied labor to the production sites, shouldering the entire burden of taxes, social security, and contributions, but never paying a single euro to the state coffers. Meanwhile, the hub company benefited from VAT deductions based on invoices for non-existent transactions, gaining an unfair competitive advantage on the market.
A slap in the face for the state: Covid funds laundered
The most odious aspect of the affair concerns the procurement of resources to fuel the dirty money ring. According to investigators from the Economic and Financial Police Unit, the Emilia-based company allegedly obtained approximately €1,6 million through the Guarantee Fund for SMEs, a tool made available by the state during the pandemic. Instead of supporting production, these public funds were allegedly used to pay false invoices, constituting the crime of embezzlement of public funds.
The seizures and the origin of the investigation
The Guardia di Finanza's investigation was triggered by the analysis of several suspicious transaction reports submitted by the anti-money laundering unit. The anomalous cash flows led the officers to their first seizures: so far, they have seized approximately €100.000 in cash, a property in Sassuolo, various company shares, and three luxury cars, with an initial value of €1 million. They are awaiting the recovery of the full €8 million, as stipulated in the preliminary investigations judge's order.
This seems like important news, but it's also confusing. The black operation was very large, and those under investigation apparently didn't pay their contributions. The shell companies and the hub company used Covid funds to pay non-existent and rigged invoices, leaving the state with a lot of money to lose. Let's hope justice recovers what was stolen and restores order.