The European Public Prosecutor’s Office in Zagreb announced on Thursday that it has opened an investigation into four individuals and one company for subsidy fraud and forgery of documents. The damage is estimated at almost €200,000.

Three of the four suspects were arrested on 27 March at the request of the European Public Prosecutor’s Office after the investigation was carried out in cooperation with the Medjimurska County Police.

The EPPO accuses the suspects of committing subsidy fraud three times in 2019 and 2020 in order to unlawfully obtain financial support for SMEs financed by the European Structural and Investment Funds, in particular three loans from the European Regional Development Fund, including one to cover damage caused by Covid-19.

The investigation revealed suspicions that the individuals set up a chain of companies owned and operated by them to prove that they were eligible for financial support for SMEs. They allegedly submitted falsified investment plans and invoices for non-existent transactions, as well as unreliable company balance sheets showing a thriving business.

According to an analysis of the company’s cash flow, the disbursed loans were not used for the intended purposes but were withdrawn from the business accounts by the defendants within 24 hours of receipt.

It is believed that these fraudulent activities caused an estimated loss of €197,281 as the loans were not returned.