Trial against six accused for tax evasion burst
The Wuppertal Regional Court has rejected the opening of main proceedings against six defendants on charges of tax evasion. At the same time, the existing arrest warrants against the defendants were lifted.
Defendants allegedly evaded taxes through straw man companies in the construction industry
The Public Prosecutor’s Office in Wuppertal has brought charges against the six defendants for aiding and abetting tax evasion, for aiding and abetting withholding and embezzling pay and for fraud. A defendant was also accused of criminal tax evasion.
The public prosecutor’s office accuses the accused of having founded “Strohmann companies” in the construction industry. For the individual Strohmann companies, foreign managing directors are said to have been appointed who left Germany shortly after the founding of the companies and thus escaped the grip of the German authorities. These Strohmann companies are not said to have carried out any construction activities of their own. It is said that fictitious invoices for services not actually rendered were sold to third parties. Commissions are said to have been paid for this.
In addition, employees who were registered with the Strohmann companies are said not to have worked for these Strohmann companies, but for the customer companies. In addition, the volume of work is said to have been far greater than that reported to the social security authorities. The main defendant alone is said to have reduced sales tax by around 470,000.00 euros in this way.
Investigations are not carried out sufficient on the amount of the evaded taxes and not paid social security contributions
The Regional Court has rejected the opening of the main trial because it considers it unlikely that the defendants will be convicted on the basis of the results of the investigation to date. In particular, the court considers the determination of the amount of damages to be erroneous. The Regional Court has ordered the Public Prosecutor’s Office to conduct follow-up investigations into the amount of damages. Until then, the Public Prosecutor’s Office had determined the amount of damage solely on the basis of the net sales of the Strohmann companies and deducted a lump sum for the wages. However, the Federal Court of Justice demands a concrete determination of the amount of damages, at least if reliable evidence is available elsewhere and the expense is not disproportionate.
In this procedure, for example, the invoice purchasers would have had to be heard as witnesses and the accounts of the customer companies audited. The public prosecutor’s office had only carried out a few random checks. Especially with regard to the accusation of withholding and embezzlement of wages, the Public Prosecutor’s Office did not take into account the fact that social security contributions had been paid for the employees. These social security contributions were only too low. These social security contributions actually paid should have been determined and deducted by the public prosecutor’s office.
Requirements for investigations by the public prosecutor’s office
The regional court assumes that the public prosecutor’s office should have clarified the questions raised by the court in the preliminary proceedings. It was not possible to answer and clarify all these questions during the main hearing. Nor was it the task of the court itself to conduct extensive subsequent investigations into these questions within the framework of the interim proceedings. In the course of the interlocutory proceedings, the court may demand individual additional evidence. However, essential parts of the preliminary proceedings cannot be carried out in the interim proceedings.
As a result, the court’s rejection order treated the investigative work of the public prosecutor’s office in these proceedings as absolutely inadequate.