Insolvency fraud in Latvia: 57 victims, losses of €81,000
Riga police have referred to prosecutors a case involving organised fraud in the insolvency services sector — 57 people have been harmed, with total losses exceeding €81,000.
Organised fraud in insolvency sector: case referred to prosecutors
The State Police Riga Regional Police Board submitted a criminal case to prosecutors on 17 August concerning prolonged and systematic fraud committed by an organised group in the insolvency services sector, recommending the initiation of criminal proceedings against three individuals.
In the criminal case, 57 people have been recognised as victims, who have collectively suffered material losses of no less than €81,303.59. Additionally, the investigation has identified possible money laundering of no less than €89,649.47.
Clients given misleading impression
During the pre-trial investigation, it was established that persons in financial difficulties turned to several interconnected companies that offered services related to natural persons' insolvency proceedings. Clients were given the impression that the services were provided by experienced specialists and that the companies were professionally competent in the insolvency sector.
Contracts were concluded with clients for the preparation of documents to initiate insolvency proceedings, providing for regular payments over several months. However, information obtained during the investigation indicates that clients' financial situation and submitted documents were not always properly assessed to promptly identify obstacles to debt settlement.
Several clients' insolvency proceedings were subsequently terminated without debt settlement. In some cases, their financial situation significantly deteriorated following receipt of the service.
Roles of three individuals in criminal scheme
The evidence obtained during the investigation indicates that the offences were committed by a group of three individuals over the period from 2018 to 2024, with each participant having a specific role.
One individual organised the company's operations, managed financial matters, ensured advertising and hired employees. The second individual primarily maintained communication with clients, obtaining information about their financial situation and monitoring payments. The third individual — a certified insolvency administrator — was involved in communication with clients and the preparation of insolvency proceedings documents.
Financial flow analysis and asset seizure
A substantial part of the investigation comprised analysis of financial flows. Part of the possibly criminally obtained funds was directed towards a transaction intended to result in the acquisition of real property. Other financial transactions, according to investigators' assessment, may have been used to create an impression of the legitimate origin of financial assets.
To ensure possible confiscation of criminally obtained property and compensation of harm caused to victims, the criminal case included seizure of moveable and immoveable property, as well as funds.
The body of evidence consists of statements from victims and witnesses, company documentation, bank account information and other criminal case materials.
Suspects and legal qualification
The criminal case has been classified under Article 177, Part 3 of the Criminal Law — fraud committed by an organised group. For one suspect, the case has additionally been classified under Article 195, Part 3 — money laundering on a large scale.
The suspects are Latvian citizens born in 1966, 1990 and 1995, who have not previously come to the attention of police. Security measures not involving deprivation of liberty have been applied to them.
The State Police reminds that no person is considered guilty until their guilt has been proved in the manner prescribed by law.
Source: Google News LV — Crime (lv)