EPPO Goliath Case: Hawala Network Used to Launder Proceeds of €200 Million VAT Fraud

The European Public Prosecutor’s Office (EPPO) has announced the first convictions in its Goliath investigation, a major cross-border VAT fraud case involving electronics trading, shell companies and the use of a Hawala network to transfer criminal proceeds. A court in Düsseldorf, Germany, found two defendants guilty of participating in a criminal organisation responsible for a scheme that caused an estimated €200 million in damage to EU and national budgets between 2019 and 2023.

The convictions were announced on 23 October 2026. The Turkish national received a sentence of seven years and two months’ imprisonment, while the Danish citizen was sentenced to five years and eight months. Both had previously been convicted in March 2025 for other tax-evasion offences connected to the same investigation. The latest decision was issued at first instance and may still be appealed.

The court found that the Turkish defendant acted as the organisation’s de facto manager and committed VAT fraud in 26 cases, while also aiding and abetting fraud involving 10 shell companies. The Danish defendant was convicted of supporting the criminal organisation and assisting VAT fraud in five cases.

Electronics Trading and Shell Companies

The investigation concerned an international criminal organisation involved in the sale of electronic goods, including AirPods and other consumer electronics. According to the EPPO, the defendants initially participated in an existing criminal network before establishing a parallel operation in 2019 to generate further proceeds through VAT fraud.

The organisation created multiple layers of companies in France, Germany, Hungary and Sweden. The actual trading activity was managed from an office in Istanbul, Turkey, while the corporate structure was used to facilitate a carousel VAT fraud scheme.

The organisation relied on shell companies, straw directors and shareholders, and fictitious identities supported by forged documents. These arrangements were allegedly used to open bank accounts and conceal the individuals controlling the companies. The court also found that the defendants used encrypted communications and aliases to conceal their identities and activities.

The VAT fraud relied on a chain of companies, including missing traders and buffers. In a typical intra-community VAT carousel scheme, goods are traded across EU borders under arrangements that can allow one company to collect VAT from a customer but fail to remit it to the tax authorities. Other entities in the chain may then claim VAT refunds, creating losses for public budgets.

Hawala Network Used to Move Criminal Proceeds

A central element of the case was the use of a Hawala network to transfer the proceeds generated by the fraud. Hawala is an informal value-transfer system based on trusted brokers who coordinate payments and settle obligations between themselves, often without a direct corresponding bank transfer between the original sender and final recipient.

The EPPO reported that the court found the defendants used such a network to move illicit proceeds. The earlier indictment, issued in October 2025, had alleged that companies controlled by the defendants were used to settle invoices involving businesses in Turkey, the Middle East and North Africa. Prosecutors had also described the suspected use of a Hawala network in North Rhine-Westphalia to transfer funds between Turkey and Germany.

The October 2026 announcement confirms the court’s finding that Hawala was used, but does not quantify the amount transferred through the network or establish each of the previously alleged routes as a separate judicial finding.

The earlier investigation also included allegations involving cryptocurrency purchases through a blockchain company and the use of fictitious consulting firms to launder proceeds. Those details formed part of the prosecution’s earlier account and were not separately confirmed in the EPPO’s announcement of the latest convictions.

Further Defendants and Proceedings

The EPPO stated that two other defendants indicted in the case have yet to face trial in these proceedings because they are currently imprisoned in Denmark. Proceedings against another individual, who acted as managing director of one of the main companies but was not involved in the VAT fraud itself, were discontinued under the relevant provision of German criminal procedure.

The case follows earlier convictions in March 2025, when two principal figures in the Goliath investigation were sentenced for other instances of tax evasion. The EPPO has described the latest convictions as the first in Germany in which a court found defendants to have acted as members of a criminal organisation in this type of case.

The investigation demonstrates how VAT fraud involving apparently legitimate commercial transactions can be connected to complex cross-border money movements. For financial crime compliance teams, the case highlights the importance of examining the relationship between a company’s stated trading activity, its ownership and control, the counterparties involved and the movement of funds.

The use of informal value-transfer networks can complicate the tracing of criminal proceeds, particularly where corporate structures and trade-related payments are used to create an appearance of legitimate commercial activity. However, the use of Hawala or another informal transfer mechanism does not, by itself, establish criminal conduct; the court’s findings relate specifically to the network used in the Goliath scheme.

The EPPO’s latest announcement places the estimated damage to EU and national budgets at €200 million for the period from 2019 to 2023. This figure reflects the court’s assessment of the damage attributed to the defendants’ conduct and should not be interpreted as the amount proven to have passed through the Hawala network.

The convictions remain subject to appeal.

By fLEXI tEAM