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Two fraudsters who laundered £70million scammed £10million from a government coronavirus support scheme while they were on bail.

Artem Terzyan, 38, from Russia and Deivis Grochiatskij, 44, from Lithuania, were jailed for 33 years for their crimes.

They headed an international criminal network which used fake companies to move money around to clean the dirty cash.

But even after they were arrested they carried on committing offences, using the bogus firms to easily claim covid support Bounce Back Loans to the tune of £10million.

They claimed up to £50,000 a time, generating over £10m in total. £3.2m of that was claimed from one UK bank alone.

PIctures of unknown associates showed them showing off huge wads of cash as part of the illicit enterprise. 

Details of the con will be hugely embarrassing for Chancellor Rishi Sunak, who dreamt up the loans to try and help businesses during lockdown.

But news of the scam comes just two weeks after the MPs on the Public Accounts Committee savaged the Government’s measures to stop the scheme being abused as ‘too little too late’.

Labour chairwoman Meg Hillier said the Bounce Back Loan scheme ‘came with colossal risks of fraud and error which are only now becoming clearer’ and £17billion may never be repaid.

Artem Terzyan, 38

Artem Terzyan, 38

Deivis Grochiatskij, 44

Deivis Grochiatskij, 44

Artem Terzyan, 38, from Russia and Deivis Grochiatskij, 44, from Lithuania, have been jailed

An unknown associate - anonymised by the NCA here - hugs a mountain of high value notes

An unknown associate - anonymised by the NCA here - hugs a mountain of high value notes

An unknown associate – anonymised by the NCA here – hugs a mountain of high value notes

Wads of cash and notebook-style ledger showing details of the money laundering operation

Wads of cash and notebook-style ledger showing details of the money laundering operation

Wads of cash and notebook-style ledger showing details of the money laundering operation 

A safe retrieved from the raid on two fraudsters' properties found this enormous safe

A safe retrieved from the raid on two fraudsters' properties found this enormous safe

A safe retrieved from the raid on two fraudsters’ properties found this enormous safe

What was the Bounce Back Loan scheme? And what did the spending watchdog find?

What was the Government’s coronavirus Bounce Back Loan scheme?

As well as furlough support, companies were able to claim money from the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), which was aimed at small companies.

The pressures the Government faced to rapidly hand out Covid loans meant that banks did not carry out some standard checks before they granted the loans. 

BBLS provided up to £50,000 to small firms, with most cash going to companies with fewer than ten employees. 

The Government has underwritten 80 per cent of all CBILS loans and 100 per cent of BBLS lending – though banks will probably need to exhaust all their options before asking the taxpayer.

Some lenders have already started paying to have companies reinstated on Companies House in an attempt to recover the debt.

In the March Budget, Chancellor Rishi Sunak announced that £100million would be used to fund a taskforce of 1,000 investigators in HM Revenue & Customs to crack down on the misuse of the furlough and self-employment income support schemes. 

What did the National Audit Office find?

The spending watchdog found that fraudsters stole billions through the scheme.

The NAO found that the Government had acted too slowly to implement basic anti-fraud measures and that these checks were ‘inadequate’.

The Government knew the risks as it launched the scheme, but had to weigh them against the consequences of not getting money to businesses rapidly, the spending watchdog added.

Checks to ensure that a company was not applying for more than one bounce back loan were not put in place until June 2020, a month after the scheme was launched, according to a report by the National Audit Office.

By then, 61 per cent of the money that was to be lent under the scheme had already been paid out to businesses.

Other counter-fraud activities did not begin until September 2020 as the Government focused on getting out the loans to support struggling companies.

Auditing giant PwC, which has been hired by the Government, has estimated 7.5 per cent of loans might be lost to fraud, at a potential £3.5billion cost to the taxpayer. However, the report notes that the Government estimated fraudulent loans were worth £4.9billion, 11 per cent of the total, as of March.

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Terzyan and Grochiatskij were rumbled after a joint investigation by the National Crime Agency and Metropolitan Police Service’s joint unit the Organised Crime Partnership.

Its investigation began in October 2017 when surveillance officers watched a man called Auriel Zylyfi place a large bag of cash in an Audi at a money counting house in North West London.

A month later another man, Artur Terziu, was seen handing over £40,000 to Zylyfi in the underground carpark of his flat in Hazlemere Court, Hendon. Both men were arrested and each sentenced to a year in prison.

OCP officers searched Zylyfi’s flat and seized a ledger detailing money laundering transactions in excess of £7m over a four-month period.

Over the next seven months the same Audi travelled extensively around the UK, stopping briefly at lorry parks and service stations to collect cash before returning to London.

It was regularly driven to Munning House in Docklands, East London, where Terzyan and Grochiatskij both lived in flats next door to each other. On multiple occasions, OCP officers watched as large bags of cash were carried from the car and into Munning House.

Both men were also seen, along with other members of their criminal network, opening bank accounts in banks across London in the names of the various fake companies they had set up, then depositing tens of thousands of pounds into those accounts at a time.

The money would be sent from one shell company to another in a complex web of transfers, before it was sent out to international accounts held in countries including Germany, Czech Republic, U.A.E, Hong Kong, and Singapore.

On June 26, 2018, OCP officers arrested Terzyan and Grochiatskij at Munning House and searched both of their flats.

They seized multiple hand-written ledgers with Terzyan’s fingerprints on, which detailed the vast sums of cash being laundered.

Also recovered from his flat was an encrypted phone, bank cards and account details of the fake companies they had set up.

Grochiatskij’s computer was seized from his flat. On it, officers found details of the bank accounts the pair used for laundering and various incriminating photos of their associates handling cash in Grochiatskij’s living room.

Another photo showed a safe containing a huge pile of cash. In the same photo was a notepad which had the address of a business unit at close by Waterfront Studios on Dock Road.

Investigators recovered CCTV footage which showed the two men delivering the safe to the unit on February, 2018. However, when it was searched eight months later, the money had already been removed.

Measurement of the safe’s dimensions showed that the amount of cash seen in the photo could have been up to £3m.

A financial investigator analysed hundreds of bank accounts controlled by Terzyan and Grochiatskij and was able to evidence that the men had laundered a total of £36m in 2017-2018, with £16m of that coming from cash deposits.

As well as the covid scheme fraud, they continued to launder criminal cash using the same method as before while on bail.

Between June 2018 and November 2020, when the pair were arrested again, they laundered a further £34m including the £10m they generated from the BBLs.

Pictures of large amounts of cash were discovered on devices belonging to the crooks

Pictures of large amounts of cash were discovered on devices belonging to the crooks

Pictures of large amounts of cash were discovered on devices belonging to the crooks

The images of the associates of the pair were used in the case against both of them in court

The images of the associates of the pair were used in the case against both of them in court

The images of the associates of the pair were used in the case against both of them in court

Investigators think the amount of cash seen in this safe photo could have been up to £3million

Investigators think the amount of cash seen in this safe photo could have been up to £3million

Investigators think the amount of cash seen in this safe photo could have been up to £3million

The two criminals laundered money by putting dirty cash through crooked companies

The two criminals laundered money by putting dirty cash through crooked companies

The two criminals laundered money by putting dirty cash through crooked companies

Images of the bundles of notes were displayed on phones and laptops seized by police

Images of the bundles of notes were displayed on phones and laptops seized by police

Images of the bundles of notes were displayed on phones and laptops seized by police

Terzyan and Grochiatskij were each charged with two counts of money laundering, for which they were found guilty following a seven-week trial in September 2021, which can only now be reported.

Earlier this month at Kingston Crown Court, Terzyan was sentenced to 17 years in prison and Grochiatskij to 16 years.

Details can only now be released following the lifting of report restrictions that were previously in place.

On sentencing the two men, HHJ Shetty noted that their exploitation of the BBL scheme played a part in ‘undermining the Government and financial institutions’ and that the ‘the British taxpayer will be staggered and upset that part of their hard-earned tax contributions was going into the pockets of criminals.’

Andy Tickner, from the Organised Crime Partnership, said: ‘This was a painstaking and complex investigation in which the team analysed reams of financial data and transactions.

‘Ultimately the case proved that these two had built a sophisticated, large-scale money laundering system which saw them transfer £70m worth of criminal cash out of the UK.

‘They did so by setting up hundreds of bogus companies and utilising an international network of criminals under their control.

‘To top it off, they stole over £10m from British taxpayers in what is believed to be one of the largest Bounce Back Loan frauds since the scheme was introduced in 2020.

‘These men and their network played a vital role in enabling other criminals to conceal and access their illicit earnings. The removal of this service will have been a massive blow to organised criminals in the UK and globally.’

The financial investigation into the two men remains ongoing. So far, the OCP has obtained freezing orders on four bank accounts which contained around £180,000 in total. Of this, £17,000.00 has been forfeited, as it was assessed to be recoverable property.

Source: Daily Mail UK

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