A Lithuanian man alleged to be the leader of a criminal organisation that was dedicated to importing wrecked cars that had been destroyed in the USA and which, after undergoing cosmetic repairs, were resold in Europe, including Portugal, was arrested in Madeira, the European Public Prosecutor’s Office reported today.
A source from the European Public Prosecutor’s Office (EPPO) told Lusa that the arrest in Madeira of the Lithuanian citizen, alleged leader of the scheme that defrauded the States of hundreds of millions of euros in customs fees and taxes (VAT) was carried out by the GNR, through the Tax Action Unit, which in Portugal accompanied the investigation that involved 18 European prosecutors.
According to the EPPO, the investigation was led by the European Public Prosecutor’s Office in Berlin (Germany) and Vilnius (Lithuania), and involved 1,000 officers from the police and tax and customs authorities, who carried out 200 searches in 10 countries.
The investigation focused on a criminal organization that imported cars that were considered salvageable for scrap by North American insurance companies and which were then imported, through a fraudulent scheme, from the United States to Europe, from where they were resold after only cosmetic repairs, in a criminal scheme that also represents “serious dangers to road safety”.
Codenamed “Nimmersatt” (Insatiable in German), it stretches from the US to Russia, with links to Canada, Hungary, Ireland and the UK, as well as 11 EU countries in the European Public Prosecutor’s Office zone.
The EPPO said that investigative measures were carried out today and on Tuesday in Portugal, Bulgaria, Estonia, Germany, Hungary, Latvia, Lithuania, the Netherlands, Romania and Spain, leading to the arrest of 10 suspects, including one of the alleged leaders – the Lithuanian detained in Madeira.
These vehicles that had crashed in the US, explains the EPPO, were sold at auctions or dismantled for scrap and the group bought “huge quantities which it then sent to the European Union” using a network of fictitious companies and false invoices to cover the origin of the cars, which arrived in the EU with their commercial history obscured.
The cars arrived at different ports, including Antwerp (Belgium), Bremerhaven (Germany), Klaipeda (Lithuania) and Rotterdam (Netherlands), the EPPO said, adding that “in order to evade a substantial part of the customs duties, the offenders presented false invoices to the authorities, declaring a value much lower than what they had paid for the vehicles.
The cars were then transported overland to Lithuania for repairs in workshops, but based on the investigation, the repairs were only superficial, to allow them to look like new and pass the required technical certification procedures.
They are then sold to end customers in Germany and other EU countries, presented as having never been in an accident or as being fully repaired, even when they have hidden damage — including missing airbags or other serious safety issues. The less valuable ones are sold to Eastern European markets.
In Germany, according to the investigation, the vehicles are sold by car dealerships that are part of the criminal organization, which fraudulently apply reduced VAT under the so-called “margin taxation regime”, a provision that allows dealers to pay VAT only on the profit margin when selling second-hand goods purchased from private individuals.
The EPPO suspects that in Lithuania the group’s members used Lithuanian companies to “launder” profits from VAT fraud and cash payments from car buyers.
The investigation found that the Lithuanian cell of the group, created in 2020 and headed by the man arrested in Madeira, used companies in Bulgaria, Estonia, Hungary, Latvia, Lithuania, the Netherlands and Romania “to hide the true volume of business”.
In Lithuania alone, at least 16,500 cars were sold, worth 144 million euros.
The suspected fraud also allowed the destroyed cars to be sold at a lower market price, also causing unfair competition.
The investigation revealed an “extremely complex criminal scheme” with ramifications in 18 countries, targeting key members of the criminal organization from Russia and Lithuania, as well as suspects responsible for importing and transporting the vehicles and dozens of car dealerships.
The losses caused by these criminal activities, which are still being assessed, are estimated at at least 31 million euros.
Freezing orders were granted for 26.5 million euros, through bank accounts, and 116 cars (approximately 2.3 million euros), half a million euros in cash and luxury items, as well as real estate, land and company shares, worth 5.1 million euros, have been seized so far.
The European Public Prosecutor’s Office is the independent public prosecutor’s office of the European Union responsible for investigating, prosecuting and bringing to trial crimes against the EU’s financial interests.