Two charged on alleged multi-million tax fraud

A building contractor and a former clerk were last night charged with making false declarations to the tax commissioner, money laundering and fraud running into several millions of euros.

Martin Farrugia, a contractor from Rabat, and Henriette Cassar, from Żebbuġ, who did not declare an occupation, were arraigned before Magistrate Gabriella Vella.

They were remanded in custody after being accused in court of criminal association. The crimes were allegedly committed between 2012 and this year.

Farrugia was also separately charged with defrauding a long list of clients.

Both accused pleaded not guilty.

Five people were arrested by the police as part of a €62 million tax fraud investigation, Times of Malta reported earlier.

Prosecutors told the court yesterday that in 2021 the police were informed by the VAT Department about suspected fraud of €4.2 million committed by

Farrugia. Investigations spread to other persons linked to him.

It was found that Cassar had deposited in her accounts some €960,000 in cheques linked to Farrugia’s business activities but had not declared any income with the Commissioner for Inland Revenue.

She also made some €150,000 in profits from her separate business related to memorabilia.

After hearing the not-guilty pleas and confirming the legality of the arrests, the court upheld a request for a freezing order over all assets of the accused.

The prosecution objected to a request for bail in view of the serious nature of the charges, the fact that civilians still had to testify, while devices and documents seized in police searches still had to be analysed. It also pointed out that other people may be arraigned in connection to the case.

Rebutting arguments by defence lawyer Franco Debono, appearing for Cassar, the prosecution said she was a clerk at the time of the alleged offences. The declarations with the tax department, fiscal VAT receipts, were filled in by her. That’s from where the €4.2 million discrepancy emerged.

The prosecution also objected to bail for Farrugia, saying he had allegedly committed fraud in respect of various civilians. They feared that they might not track him down as the address on his ID card was not where he was found.

And there were administrative cases in his regard where he was proving difficult to notify for court proceedings.

His lawyer, Dominic Micallef, said that police should have all evidence against him wrapped up once they arraigned him. Were it otherwise they could have granted him police bail.

In dismissing the requests for bail the court observed that in the case against Cassar, although the injured party was the tax commissioner, there were other alleged victims who were civilians.

So at this early stage of proceedings, the request for bail was being denied until witnesses testified.

Bail was also being denied for Farrugia since the address on the charges was different from his actual one.