On 23 October 2026, the Düsseldorf Regional Court sentenced two parties to several years of imprisonment in the international tax fraud complex "Operation Goliath". According to the European Public Prosecutor's Office (EPPO), these are the first convictions in a German EPPO case, in which a court found that the accused had participated in a criminal organisation. The case shows how closely organised VAT crime, cross-border trade in goods and money laundering can be linked.
Prison sentences of more than five and seven years
The Düsseldorf Regional Court imposed a prison sentence of seven years and two months on a Turkish national. A Danish national was sentenced to five years and eight months. Both had already been convicted of further tax evasion in March 2025 in connection with the investigation complex and were already serving prison sentences in Germany.
Among other things, the Turkish defendant was charged with membership of a criminal organisation and VAT fraud in numerous cases. According to the findings of the court, he acted as the actual head of the network. He was assigned 26 cases of VAT fraud and aid related to ten sham companies.
The Danish defendant was convicted of supporting the criminal organisation and aiding VAT fraud in five cases. The judgments were delivered at first instance and are still countervailable. Two other defendants still have to answer to court in this complex of proceedings.
Front companies and international electronics trade
According to the Court's findings, the organisation operated a cross-border system of VAT fraud. The focus was on the trade in electronic goods, including AirPods and other electronic products.
An extensive network of sham companies in Germany and abroad has been established for this purpose. The companies served, among other things, as so-called missing traders and buffers within the fraudulent supply chains. The actual trade in goods was organized from Istanbul. The participants used straw people, encrypted communication channels and false identities to disguise their activities and responsibilities.
The economic damage to the budgets of the EU and the participating countries was estimated at around EUR 200 million between 2019 and 2023. The EPPO's investigations had already revealed a significant extent of the fraud system.
Hawala network to postpone the proceeds
Another element of the system was the concealment of profits from VAT fraud. According to the findings of the court, the perpetrators also used a Hawala network.
Hawala is an informal money transfer system based on trust-based intermediaries. Amounts of money can be transferred across different countries without the transactions necessarily running over regular bank payments. This structure can make it difficult to understand cash flows and is therefore also relevant in the context of money laundering.
The case illustrates that VAT fraud cannot be considered in isolation. Organised groups of offenders often combine business start-ups, commodity movements, accounting and financial transactions to form a complex overall system.
Importance for compliance and risk management
The convictions are also relevant for companies active in the electronics trade or involved in cross-border supply chains. Especially where goods are resold several times within a short time and numerous companies are involved, significant VAT and money laundering risks can arise.
Companies should therefore not limit their audit processes to the formal existence of a business partner. Rather, it is crucial whether business partners, movements of goods, invoices and cash flows are consistent.
The main test areas include in particular:
- Counterparties' audit: Identity, economic activity, right of representation and actual business activities of suppliers and customers should be comprehensible.
- VAT identification numbers: The validity of the VAT ID and the compliance of company data should be reviewed and documented regularly.
- Plausibility of movements of goods: Delivery routes, storage locations, transport documents and actual goods availability must fit the documented business process.
- Accounting and supply chain verification: Unusually many intermediaries, conspicuous pricing or short-term resales may be the reason for in-depth testing.
- Payment methods: Payments by third parties, unusual payment instructions or incomprehensible financing methods should be critically questioned.
- Documentation and escalation: Disorders must be documented internally and passed on to the competent authorities. Testing processes should provide for clear responsibilities and escalation pathways.
Not every unusual business model is automatically fraudulent. The decisive factor is the overall view of circumstances. Companies must recognise risks, assess them appropriately and document their decisions in a comprehensible manner.
Organized VAT crime as a compliance risk
Operation Goliath shows that organized VAT crime can go far beyond individual faulty invoices or tax irregularities. Seed societies, international trade structures and informal financial transfers can be part of a labour-sharing organised criminal system.
Therefore, it is becoming increasingly important for companies to review business partners and supply chains not only formally, but also economically and effectively. Effective compliance structures must detect abnormalities at an early stage, enable comprehensible controls and ensure that suspicions are adequately treated internally.
The first German EPPO convictions concerning participation in a criminal organisation in connection with VAT fraud underline the criminal dimension of such systems. At the same time, they make it clear that resilient testing and control processes are an essential part of corporate risk management.
This post was created using artificial intelligence. The contents serve for general information and do not replace individual legal advice.