Accused of VAT fraud and money laundering, Lycamobile could be fined 10 million euros.
Lycamobile, the mobile virtual operator (MVNO), is currently in turmoil. With a presence in 19 countries and more than 6.5 million customers, the firm is about to receive a colossal fine of 10 million euros. This trial follows a series of startling revelations, mixing VAT fraud, money laundering and a network of front companies.
The mobile operator, known for its SIM cards marketed by the firm Lycatel, is accused of having allowed the laundering of more than 17 million euros in the space of only seven months. At the heart of this financial whirlwind is a network of front companies and traders in the Parisian district of La Chapelle.
According to investigators, the system operated in a circular fashion. Companies in the Building and Public Works (BTP) sector made transfers and checks to “filter” companies in exchange for false invoices. These “filter” companies, which turned out to be empty shells, then bought cards and phone top-ups from Lycamobile. However, these goods were never received.
This is how the cash, relieved of commissions for the intermediaries, finally returned to the initial construction companies. The latter would have used this money to illegally remunerate their employees or their managers.
Prepaid cards and their recharges, for their part, were resold on the “ethnic market”. They found takers among North African, African and Indo-Pakistani communities wishing to telephone abroad.
10 million euros fine required against Lycamobile
The investigation, which started in 2016, resulted in a harsh indictment on June 29, 2023. The prosecution requested a fine of 10 million euros against the two French Lycamobile companies for VAT fraud and money laundering between 2014 and 2016. In addition, prison sentences and heavy fines were required against three managers of the operator. They also risk being banned from running a business for several years.
Lycamobile defends itself vigorously, assuring that this “system” was put in place “without its knowledge”. Whether that defense will hold up in court remains to be seen. The outcome of this legal soap opera will be crucial for the firm.
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