Czech Police conclude investigation into large-scale economic and tax crime

Criminologists from the Economic Crime Department of the Criminal Police Service, in cooperation with investigators from the Regional Directorate of Police in the Vysočina Region, have completed an extensive investigation into economic and tax fraud. The case, which involved an organized criminal group, resulted in an estimated financial loss of CZK 50 million. On February 25, the investigator submitted a proposal for indictment to the Public Prosecutor’s Office in Jihlava, citing charges of participating in an organized criminal group, tax evasion, money laundering, and unauthorized business activities. The investigation produced extensive documentation, amounting to 12,500 pages.

The case involves nine individuals, aged between 24 and 41, from the Czech Republic and Slovakia. Each played a specific role within the group, which included organizers, coordinators, administrative staff, and so-called “white horses” who acted as frontmen for the fraudulent operations. All suspects are being prosecuted while at large.

The fraudulent activities were carried out through a series of companies that operated in succession, with each being dissolved or placed into insolvency before a new company was established. Between 2017 and 2018, the group conducted its activities through Company “A,” which was subsequently closed. This pattern continued with Company “B” from 2018 to 2019, Company “C” from 2020 to 2022, and Company “D” in 2023, all of which are now in liquidation.

The companies operated under the guise of employment agencies without the necessary permits, supplying hundreds of foreign workers—primarily in manual labor roles—to at least forty businesses. These companies circumvented legal requirements by structuring employment contracts to avoid paying mandatory contributions, including social security, health insurance, and income tax. As a result, legal obligations for both employees and employers were consistently evaded.

Authorities found that when state agencies, including tax and labor offices, initiated investigations, the companies were transferred to “white horses,” typically Ukrainian nationals, in an effort to obstruct audits and prevent authorities from accurately assessing tax liabilities. The fraudulent operations would then resume under a newly established company.

According to Chief Commissioner Ing. Tomáš Mecera of the Economic Crime Department, the group’s deliberate restructuring aimed to complicate investigations and avoid legal consequences. He noted that the accused systematically repeated their activities under different corporate entities to maintain their scheme.

The total financial damage from unpaid taxes and mandatory contributions is estimated at CZK 50 million. If convicted, the accused individuals face prison sentences of up to twelve years.

Source: Police of the Czech Republic