The Guardia Civil’s financial crimes division have arrested 130 people after discovering a businessman offering fake work contracts to help people obtain benefits they were not entitled to.
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The scam involved two companies based out of Torre Pacheco in Murcia. The main company was a real fruit and vegetable supply company that operated normally, but whose owner had diversified into benefit fraud. He had setup a second company which had no clients, assets or offices but which served as a front company to launder the work contracts through. Unemployed people with no access to benefits would pay one hundred euros for a work contract, as well as having to cover the costs of their social security payments whilst the work contract was active. Once sufficient time had been accumulated for unemployment benefit to be available again, these workers would be “fired” by the company, giving them access to these benefits.
The scam has cost the public coffers over a million euros in unearned social security payments, and in addition the fake company has accumulated over 400,000 euros in unpaid taxes and social security contributions. The social security office has started legal proceedings to reclaim the unearned unemployment payments from the benefit frauds.
The Guardia Civil was started the investigation, named “Operación Tributo” at the end of 2014 after the provincial employment office became suspicious of a large number of short and medium term work contracts emanating from these companies. The police started a lengthy investigation which involved tracing all work contracts and financial accounts for the companies, quickly realising that something was wrong at these companies. Amongst other irregularities, a senior member of the fruit and vegetable company was the figurehead of the second company, proving an administrative link between the two companies.
The scam was run by a 38 year old man from Torre Pacheco who has a criminal record for fraud, along with members of his immediate family. Police also searched the offices of a local gestoría who were in charge of the registering of labour contracts on behalf of the company. 116 of the arrested people live in Murcia, with the rest living in nearby provinces. The Police said that the scam operated by “word of mouth” with people telling friends and families about the possibility of increasing their pension contribution or obtaining benefits for a small down payment.
In recent years Spain has increased the maximum penalties for such financial crimes, as part of a wider crackdown on the black economy. The businessman behind this scam could be facing a maximum of six years in jail, 10 years debarment from being a company director and a hefty fine. Those workers who took advantage of the scam are also looking at possible jail sentences as well as having to repay the fraudulent benefits claimed.