Large Sum Embezzled from State Through Fraudulent Schemes in the Vehicle Import and Export Sector

During an ongoing criminal investigation by the Investigative Committee of Armenia, evidence has been uncovered regarding a fraudulent scheme involving the embezzlement of substantial amounts from the state budget through the activities of three companies engaged in the retail sale of light passenger vehicles. The investigation centers on a key individual who is reportedly the effective leader and actual owner of these companies, alongside agreements made with the company's director and full participant.

A new criminal case has been initiated under the third part of the third point of Article 255 of the Criminal Code of the Republic of Armenia concerning particularly large-scale embezzlement. As a result of extensive procedural and evidential actions carried out, it has been established that T.H., who has been officially registered, effectively managed the activities of the companies 'Avtonekror' and 'Avtonekror’s Union' and was the actual owner from 2020 to 2023. He allegedly fraudulently created a debit amount of 3,868,108,776 AMD in the single tax account of the Republic of Armenia's state budget, from which he embezzled 406,596,400 AMD during 2021-2022.

Specifically, T.H. organized the activities of these companies in a manner that allowed individuals to purchase vehicles from abroad under the names of these companies while employing deceptive practices to misrepresent the facts. This facilitated both personal financial benefits for these individuals and a beneficial position for the companies involved.

Through this mechanism, individuals paid significantly lower taxes for customs clearance of vehicles, while the companies could reclaim the VAT amounts debited that were technically non-returnable under customs laws, obtained by physical individuals through their own financial means. During 2020-2022, approximately 7,452 vehicles were imported under the names of these companies based on powers of attorney provided to them by individuals for a specific commission fee.

To gain illicit profits from the sale of imported vehicles, 3,433 vehicles belonging to individuals but imported under the name of 'Avtonekror' and 'Avtonekror’s Union' were exported to EAEU countries. The sale prices of these vehicles were recorded as being less than their acquisition prices, thereby distorting data regarding the true beneficiaries and actual sale prices of the transactions.

These actions led to an artificially created tax loss of 5,699,228,401 AMD in the profit tax reports submitted to the State Revenue Committee by 'Avtonekror.' Moreover, from 2020 to 2023, tax refunds were formed in the tax balance of 'Avtonekror' and 'Avtonekror’s Union' for 3,868,108,776 AMD in VAT. Subsequently, in order to complete the embezzlement of the VAT debit amounts, between April 2, 2021, and November 16, 2022, 'Avtonekror' submitted 12 requests in simplified procedures to the State Revenue Committee for debited VAT refunds of up to 40 million AMD each time, resulting in the transfer of 406,596,400 AMD to the company's bank account.

Based on the obtained factual data, on March 9, 2023, an investigator submitted a petition to the supervising prosecutor to initiate public criminal proceedings against the actual owner and the person managing the activities of the mentioned companies under the third part of the third point of Article 255 of the Criminal Code of Armenia. This petition was approved by the prosecutor, and charges were brought against the individual. On the same day, a decision was made to arrest the individual, and a motion was filed with the court to choose detention as a preventive measure, which was granted.

The investigation continues.