Several arrests across Europe in suspected phone fraud worth €300m

Police were carrying out raids in 19 European countries on Tuesday over suspected fraud involving mobile phones sold online, resulting in damages of around €300 million ($340 million), EU prosecutors say.

The European Public Prosecutor's Office (EPPO) is alleging that crime organizations have sold over 1 million used mobile phones claiming they were new, according to a press release published on Tuesday.

Over 160 searches have been carried out across Europe since Saturday, leading to the arrest of seven suspects in Austria, Germany and Spain, including the two leaders of the organization, the EPPO said.

How did the scheme work?

According to investigators, the mobile phones were assembled in Hong Kong and the United Arab Emirates using second-hand components. The devices were then cleaned, repackaged and shipped to the Netherlands, before they were transported to warehouses in Germany.

Consumers across the EU could buy the phones which were advertised as new phones on online marketplaces. More than 1 million fraudulent phones are believed to have been sold since 2018.

The suspects are also alleged to have abused a tax arrangement through shell companies based in EU countries and Switzerland.

This has caused a loss of value added tax (VAT) of over €30 million to several EU countries, according to the EPPO, including at least €25 million in Germany.

Operation focused on Germany

Germany's north-western state of North Rhine-Westphalia was a key focus of the operation.

In the city of Krefeld, a warehouse in an industrial area was searched, according to information obtained by dpa.

Around 10,000 to 15,000 mobile phones were stored there, according to a dpa reporter on the ground.

Around 1,770 tax, customs and police investigators took part in the operation, according to the EPPO.

The searches were carried out in Germany, Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, Finland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Spain, Switzerland and the Netherlands.

A witness was also questioned in Britain. A large quantity of digital and physical evidence has been seized and secured, the EPPO said.