A French-Israeli dual national was extradited from Israel to France on Wednesday to face charges over a vast tax fraud dubbed by French media as “the scam of the century,” in which he is suspected of concealing from French authorities some €51 million (roughly $57 million).
Michael Aknin, 39, allegedly ran several companies together with an accomplice, with the intention of carrying out large-scale tax fraud in 2008 and 2009.
The money was transferred to bank accounts in East Asia.
Aknin was arrested in Israel in September 2018, and tried to fight the extradition by suing the state in the Jerusalem District Court.
He is also wanted by French authorities for allegedly defrauding a communications company and deceiving its customers. He is suspected of artificially inflating sales reports to increase the commissions he received and then laundering the money he obtained, causing the company to collapse, according to extradition papers presented to the Jerusalem District Court during his case.
The accomplice, Stéphane Alzraa, also a French-Israeli dual national, was sentenced by a Lyon court on July 12 to nine years in prison for his involvement.
He was convicted of organized fraud and aggravated money laundering and fined €100,000 (approximately $112,000).
The Lyon court granted the state €50 million (approximately $56 million) in damages, plus a symbolic single euro for damage to the country’s image.
Alzraa, 38, was acquitted of criminal conspiracy charges, as were three other defendants in the case. Alzraa had fled to Israel from France in 2015, skipping the country while on a prison furlough after he was sentenced to 30 months in June 2014 for abuse of property.
— Le Progrès (@Le_Progres) November 22, 2016
He was arrested during a routine traffic check in Tel Aviv in November 2016 under the name of David Blomberg, and was extradited to France and jailed there in April 2018.
The tax fraud charges concern an alleged scam by the two men to sell carbon credits obtained on European exchanges at lower prices in France by moving their earnings out of the country before French authorities could obtain the value-added tax on the sale.
In 2008 and 2009, multiple groups of fraudsters took advantage of differing tax rules in different EU countries to buy and sell the carbon credits, or permission to emit carbon dioxide, on exchanges set up throughout Europe. The scammers would buy the credits in a country with no value-added tax, and quickly sell them in France or other countries that did charge VAT.
Generally, merchants have 90 days to remit the VAT they collect to the French government. The perpetrators took advantage of this time window to divert the money offshore and transfer it through a series of shell companies until it effectively vanished. The French government has estimated it lost a total of €1.6 billion ($1.8 billion) in unpaid VAT taxes from various fraudsters in this way, and the total loss to all European countries is estimated at €5-10 billion.