Insolvency fraud scheme: 50+ victims, three suspects detained in Latvia
The State Police have submitted a case to the Prosecutor's Office concerning an insolvency scheme in which more than 50 people have lost a total of over €80,000.
Police uncover organised insolvency fraud scheme affecting 50 victims
Google News LV — Crime reports that the State Police have concluded a lengthy investigation into an extensive fraud scheme in the insolvency sector, with more than fifty persons registered as victims.
People who were in serious financial difficulties and sought assistance in resolving their debts instead suffered even greater losses — a total of more than eighty thousand euros. The case has been submitted to the Prosecutor's Office with a recommendation to bring three persons to criminal liability.
Multiple companies offered fictitious legal services
The scheme was based on several interconnected companies that actively advertised legal services to persons wishing to initiate insolvency proceedings. Clients were given the impression that they had fallen into the hands of experienced specialists.
A contract was concluded with each client for document preparation, providing for payments over several months. However, the investigation revealed that employees frequently failed to properly assess clients' actual financial situation and submitted documents. As a result, many insolvency proceedings concluded without debt discharge, and their financial situation deteriorated further.
Organised group operated from 2018 to 2024
Investigators determined that the business was run over a six-year period by a group of three people with clearly divided responsibilities. One person took on management, handled finances, organised advertising and hired personnel. The second primarily communicated with clients, gathered information about their financial situation and monitored timely receipt of payments. The third — a certified insolvency administrator — helped prepare the necessary documents and also directly consulted with clients.
Nearly €90,000 traced to real estate transactions
A significant part of the investigation was devoted to tracing the flow of funds. Police determined that criminally obtained funds totalling nearly ninety thousand euros were diverted into various transactions, the primary purpose of which was the acquisition of real estate. Other financial manoeuvres were also carried out to conceal the origin of the funds and introduce them into lawful circulation. To ensure the ability to cover procedural costs and pay compensation to victims, law enforcement officers have placed arrests on various properties, assets and monetary funds.
Three Latvian citizens referred to Prosecutor's Office
A few weeks ago the investigation was fully completed and all materials sent to the Prosecutor's Office. The suspects — Latvian citizens born in 1966, 1990 and 1995 respectively — had not previously come to the attention of the police. They are currently subject to security measures that do not involve deprivation of liberty.
The case has been classified under provisions concerning fraud committed by an organised group; one person has additionally been charged with legalisation of criminally obtained funds on a large scale. The State Police remind that no one can be considered guilty before a court judgment.
Source: Google News LV — Crime (lv)