Years of investigation and court hearings have finally resulted in punishment for the VAT fraud and money laundering committed by Lycamobile’s French division. Le Monde reports:
Les sociétés françaises de Lycamobile ont été condamnées jeudi 26 octobre à Paris à 10 millions d’euros d’amende pour blanchiment et escroquerie à la taxe sur la valeur ajoutée (TVA), l’ancien PDG du groupe se voyant infliger de la prison ferme et une lourde amende pour complicité de ce second délit.
The French companies of Lycamobile were sentenced to a fine of 10 million euros for money laundering and value added tax (VAT) fraud on Thursday, October 26, in Paris, with the former CEO of the group receiving a prison sentence and a heavy fine for complicity in this second offense.
The fines were split between a EUR7mn (USD7.4mn) penalty for Lycamobile France and a EUR3mn (USD3.2mn) penalty for Lycamobile Services. Put simply, they were found guilty of using a complicated arrangement of shell companies that made cash payments to construction workers without accounting for them, and of deceiving the tax authorities in order to make illegitimate use of a VAT exemption scheme.
The international MVNO group responded with a press release that criticized the court’s sentence and stated their intention to appeal. Lycamobile defended themselves by blaming two rogue salespeople for the money laundering, saying they had been dismissed as soon as their wrongdoing came to light. They also claimed to be innocent of VAT fraud, claiming they had merely been following the regulatory framework that applies to VAT in the telephony sector.
A total of EUR17mn (USD18mn) was found to have been laundered between 2014 and 2016. This culminated in a police raid on Lycamobile’s Paris offices during June 2016. 19 arrests were made at that time, including Alain Jochimek, Lycamobile’s Directeur Général for France, who was responsible for overseeing both Lycamobile France and Lycamobile Services.
The court decided that Jochimek deserved punishment for both the money laundering and the tax fraud, collectively resulting in a prison sentence of 3 years, although 18 months of his sentence will likely be spent wearing a tracking bracelet whilst outside of detention. Jochimek was also fined EUR120,000 (USD127,000) and is banned from managing any business for 5 years. Christopher Tooley, the British-based former CEO of Lycamobile Group (pictured) was also given the same prison sentence and ban on managing businesses, plus a EUR250,000 (USD264,000) fine, though his offense related solely to the tax fraud. Several other Lycamobile employees received punishments but another British executive, Andrew England, was released.
