An ex-math teacher turned Marseilles piano-bar manager who claimed links to Corsica’s underworld allegedly spearheaded a 385 million-euro ($478 million) tax scam and spent part of the proceeds on Beverly Hills real estate.
A day before the cross-examination of Christiane Melgrani, 59, was set to begin at her trial in Paris investigators admitted that they’ve lost track of nearly half the money. She denies the charge of being a ringleader in the biggest part of scams involving taxes on carbon-emissions permits that’s cost the French about $2 billion, blaming two dead men instead.
Emmanuel Dusch, one of the main investigators in the probe, said Monday at the Paris criminal court that Melgrani and one of her co-conspirators were wiretapped discussing ways to foil and slow down international investigations concerning offshore bank accounts. For the most part, their plan was successful.
“Due to the time limit on storing bank data we have a gap of several tens of millions of euros,” Dusch said. “There are ways to slow down international investigations with certain legal submissions.”
Honk Kong Account
Investigators say in the indictment that they weren’t able to trace the final beneficiaries of 154 million euros from the scam that went to a Hong Kong account at Standard Chartered Plc because they were unable to obtain any data from the bank before April 1, 2009. Standard Chartered didn’t respond to requests for comment on the matter.
The EU emissions-trading system was undercut in the last decade by the so-called carousel fraud. CO2-permit sellers known as “missing traders” siphoned off the value-added tax due on the trades and then disappeared.
Several people have been convicted in France for roles in the crime, which investigators say cost the government 1.6 billion euros. In Germany, seven former Deutsche Bank AG managers were also found guilty by a court of participating in a parallel conspiracy to cheat on VAT refunds for carbon-emissions trading.
Melgrani, who holds a master’s degree in information technology, denied being in on the VAT fraud but admitted helping to launder the gains.
“I was OK with the whole money laundering but not the VAT part, I did it knowingly,” she told the court in a statement late on Monday before the day’s hearing wrapped up. “I didn’t want to take part directly in the carbon scam in France because I had just gotten out of a VAT case.”
She claims to have made less than 10 million euros for her part.
“I benefited from it and made my family benefit from it—nothing extraordinary,” Melgrani said. She is set to be interrogated several times during the trial scheduled to last until the end of March.
In the indictment, investigators questioned her story. They said that Melgrani invested more than 10 million euros in Marseilles real-estate and is also linked to a $7 million property located on Melrose Avenue in Los Angeles, and a four-apartment building in Beverly Hills.
Melgrani also organized a lavish birthday party that cost as much as 300,000 euros for her twin nephews who were turning 18 where Charles Aznavour, sometimes described as “the French Frank Sinatra,” gave a private performance, according to the indictment.
Over the years, Melgrani has earned a reputation for extortion, corruption and inspiring fear, according to the indictment. She left teaching to become a telematics engineer in the 1980s. She ended up in charge of a Marseilles piano-bar in the nineties, entering the cellphone industry, and being convicted four times since.
During the course of the carbon-fraud probe, Melgrani was caught on tape several times even though she used a U.K. cellphone to avoid detection. She was wiretapped boasting about information she had obtained from the police about one of her Marseilles associates also facing trial, Gerard Chetrit, 48.
According to the indictment, Melgrani was also recorded saying that, for a price, she could get rid of a key piece of evidence—a tape of Chetrit making a carbon trade under an alias.
In February 2016, Chetrit contacted Melgrani to tell her he could give her 900,000 euros in cash in Paris. A day after the money was handed over at a restaurant, other associates of Melgrani, also facing a trial, collected 375,000 euros at the Marseilles restaurant run by her female partner.
Melgrani and her associates allegedly ran a system that took advantage of the fact that sales of emission certificates included value-added tax. The group is accused of setting up a chain of companies selling certificates within France and other European states. Some of the companies didn’t transfer the VAT they received on the sales while the buyers used the invoices to seek tax refunds.
The Marseilles duo also spoke of other plans. Melgrani and Chetrit were recorded discussing on the phone ways to earn a fortune through an insider trade suggested by the 48-year-old.