Attempt to Embezzle Large Amounts from the State Budget

During the course of the criminal proceedings investigated by the Investigative Department of the State Revenue Committee of Armenia, a fraudulent mechanism for embezzling large amounts from the state budget has been uncovered. This was reported by the Information and Public Relations Department of the SRC.

Specifically, a report was received by the Investigative Department from the Department of Investigation and Operational Intelligence of the SRC indicating that on June 30, 2022, false data containing corrected calculations of income tax and social security contributions were submitted to the tax authorities on behalf of an LLC engaged in interregional cargo transportation. As a result, the amounts of income tax previously accurately calculated and paid to the state budget by the company were reduced. Consequently, an exceptionally large amount of 63 million AMD in income tax was deemed overpaid and refunded to the consolidated tax account.

A criminal case has been initiated in the Investigative Department of the SRC based on the relevant article of the Criminal Code of Armenia. During the investigation of the criminal case, it was disclosed that from June 11 to July 10, 2022, similar false data-containing corrected calculations of income tax and social security contributions were submitted to the tax authorities on behalf of four other companies, resulting in a total of 495 million AMD in income tax previously accurately calculated and paid to the state budget being considered overpaid and refunded to the consolidated tax account.

As part of the extensive operational-investigative measures and comprehensive investigative actions carried out within the framework of the criminal case, it was revealed that the tax calculations based on the false data of the mentioned companies were not submitted by their actual beneficiaries. Instead, the embezzlement of approximately 560 million AMD from the state budget was organized through a pre-planned mechanism by Armenian citizens H.K. and G.N.

Specifically, it was established during the investigation that H.K. and G.N., in order to implement their criminal intentions unimpeded and conceal the crime, founded nine companies in June 2022 without the intention of conducting actual business activities. They also opened 23 bank accounts in various commercial banks operating under these companies and in their own names.

Subsequently, to gain access to the electronic system for submitting the tax calculations of the five mentioned organizations, H.K. and G.N. forged seals, powers of attorney, applications, and extracts from the state registry of legal entities. By presenting these forged documents to the Armenian Ministry of Justice's State Registry and the Taxpayer Service Department of the SRC, they were registered as directors of the organizations and authorized users in the electronic system, on the basis of which they obtained access codes and passwords for accessing the tax authority's electronic system.

Using the fraudulently obtained codes and passwords, they accessed the electronic system for submitting tax calculations for those five organizations and submitted false income tax and social security contribution calculations, reducing the amounts of income tax previously correctly calculated and paid to the state budget by these companies. As a result, the income tax amounts were treated as overpaid and refunded from the state budget to the consolidated tax account.

Due to the size of the amounts being refunded and in order to avoid tax control and remain under the radar of tax officials, the mentioned individuals presented 167 applications to the tax authorities for the return of income tax amounts in parts to the bank accounts they opened. Based on these applications, the funds were transferred to those accounts.

Subsequently, to hide the illegal origin of the embezzled funds, H.K. and G.N. circulated the monetary resources through numerous transactions including through the bank accounts of newly established companies and electronic wallets, and they withdrew cash to manage them. However, they were unable to manage a portion of the embezzled funds due to immediate prohibitive measures applied by the prosecuting authority.

During the investigation of the criminal case, sufficient evidence was gathered to make decisions regarding H.K. and G.N. for public criminal prosecution under point 3 of part 3 of article 255 of the Criminal Code of Armenia. As a result of coordinated actions by the employees of the Investigative Department of the SRC, the Departments of Investigation, Operational Intelligence, and the Malatia Division of the Yerevan City Police, H.K. and G.N. were found, arrested, and presented to the prosecuting authority. Charges have been pressed against them under point 3 of part 3 of article 255 of the Criminal Code of Armenia, and they have been subjected to pre-trial detention as a preventive measure.

The investigation by the Investigative Department of the SRC has also obtained factual data indicating that the aforementioned individuals, through pre-planned schemes of bank transfers, concealed and distorted the origin and true nature of assets acquired through criminal means by presenting the embezzled funds from the state budget as the results of business activities, thus managing them without obstacles. Consequently, the actions of H.K. and G.N. also exhibit signs of a socially dangerous act stipulated by article 296 of the Criminal Code of Armenia (money laundering), which will be appropriately evaluated during the investigation.

Operational-investigative measures and investigative actions are ongoing, and measures are being taken to restore the damage caused to the state and to identify accomplices involved in the criminal chain.