10 million euros fine required against Lycamobile for VAT fraud and money laundering

2023-06-29 18:02:11

«Two delinquent systems that meet“: the prosecution demanded a fine of 10 million euros in Paris on Thursday against the two French companies of the operator Lycamobile for VAT fraud and money laundering between 2014 and 2016, as well as imprisonment and heavy fines against three leaders. The representative of the National Financial Prosecutor’s Office (PNF) requested the penultimate day of this trial opened on June 12 in Paris, before the pleadings for release on Wednesday from the lawyers of the companies and their managers, who dispute any violation.

The prosecutor demanded a fine of 5 million euros against each of the companies “siamese» Lycamobile France and Lycamobile Services, with in particular a «display of the condemnation on the door of each dealer” of the brand. “We have a group and its leaders who blithely exceed the limits of legality and commit offenses that are very detrimental to public finances“, he estimated.

Against the former British CEO of the group Christopher Tooley, suspected of complicity in VAT fraud in an organized gang, he requested two years’ imprisonment, including one year and a fine of 600,000 euros. The magistrate asked for the same prison sentence for VAT fraud in an organized gang against the Briton Andrew England, according to him “straw managerfrom Lycamobile Services (LMS), with a fine of 250,000 euros. For the former managing director of LMS, Alain Jochimek, described as a “keystone of the system“, three years in prison including two years firm and 600,000 euros fine were requested.

In addition, for the three men: five years of prohibition to manage a company. Eight other people, suspected of having played roles to varying degrees in the alleged money laundering scheme, were also on trial. François-Xavier Dulin requested sentences ranging from six months suspended prison sentence to two years firm, mostly accompanied by fines between 8,000 and 50,000 euros. “Everyone had their role and everyone benefited from the situation.“, he said. The lawyer for the State, a civil party, requested 7.9 million euros in damages for his financial loss concerning the VAT fraud.

“Making numbers”

In his indictment, the financial prosecutor first argued that Lycamobile had misguided a legal regime derogating from VAT (value added tax), set up in 2012 by the French Parliament in the telephone sector. “This regime had to be applied, but until the end, and all the difficulty is there“, underlined the prosecutor, castigating a”insincere billingof LMS and the absence ofminimal verification“of the actual activity of the companies to which it sold cards, companies”filterswhich were actually empty shells.

For the PNF magistrate, this allowed Lycamobile Services to seek VAT refunds from the State while “capturing considerable market share“by selling its products”duty free“. LMS was specialized in “the ethnic market» North African, African and Indo-Pakistani communities wishing to call abroad. At the same time, there existed for the prosecutor a whitewashing mechanism with the “convert phone cards to cash».

According to the prosecution, a scheme involved these same companies “filtersas well as two Lycamobile salespeople, who sold cards and top-ups in cash to shops in the Chapelle district, in the north of Paris. This allowed construction companies to recover cash in order to illegally remunerate their employees or managers. For the financial prosecutor, the companies Lycamobile and Alain Jochimek looked at this system with a “more than benevolent eye“, And this “because there was a need to make numbers“. They have “wanted to brutally invest in the mobile phone top-up market by hijacking French law“said the magistrate. During the trial, the managers and their advisers fought to argue that this fraud had been set up without their knowledge. They also affirmed their good faith by saying that they had applied a VAT regime “OBLIGATORY“Which they assured to have respected the rules.

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