Devasini and van der Velde in business with the king of EU VAT scams

"Operation Medina": a Spanish ruling reveals the ties in Europe, Asia, and the US through the companies PAG Asia and Yuraku between Tether and Bitfinex CFO and CEO with the network of the Dutchman Gennaro "Rino" Platone, the mobster convincted in Spain and Germany who ran an illegal business worth 500 million euros a year

Di Nicola Borzi e Stefano Vergine
14 Novembre 2022

There is a secret behind the foundation of Bitfinex, one of the largest global cryptocurrency exchanges, and Tether, the so-called “central bank of the crypto ecosystem”, which manages the dollar-linked stablecoin of the same name worth 70 billion dollars. A secret that binds the Italian cryptocurrency guru, Giancarlo Devasini, financial director of Bitfinex and Tether, and the Dutchman Ludovicus Jan van der Velde, CEO in both the companies. They both have been doing business for years with Dutchman Gennaro “Rino” Platone. Platone’s name says nothing to ordinary people, but is a well known to the police and tax authorities across Europe. For years Platone was the undisputed king of some of the major VAT scams in the Old Continent, capable of achieving a turnover of half a billion euros a year. It is no coincidence that “Rino”, so elusive that not even a photo of him can be found, has about twenty convictions on his shoulders in Spain and Germany, investigations in the Netherlands, the United Kingdom and Italy. The link that connects Platone to Devasini is the company Perpetual Action Group (Asia) Inc, in the acronym Pag Asia, and its subsidiary Pag Sam in MonteCarlo. The thread that connects Platone to van der Velde is Yuraku, a group of companies active between Singapore, the United States and the Netherlands.

The Hong Kong – Milan Connection

Until now, Devasini and van der Velde have been considered the two managers who created Tether from scratch, the cryptocurrency whose value, unlike Bitcoin or other tokens, is linked to that of the US dollar and is therefore considered stable. Without getting into technicalities, Tether today has a market capitalization of around $ 70 billion, which means that its issuer has raised this amount by putting virtual coins into circulation. But who is behind Tether? Giancarlo Devasini, a 58-year-old Italian former plastic surgeon, and 59-year-old Dutch electronic manager Jan Ludovicus van der Velde in January 2013 took top positions in Tether and Bitfinex, one of the main global cryptoexchanges: in the two companies, Devasini is the financial manager (CFO), van der Velde is the chief executive officer (CEO). But how did their roads cross, given the almost 9,500 kilometers that separate Hong Kong, the residence of van der Velde, from Milan, the base of Devasini? And when did they meet? The official reconstructions, on this, say nothing. The Italian independent newspaper Il Fatto Quotidiano on behalf of the investigative journalism consortium Eic analyzed legal documents, court rulings, corporate files to reconstruct the hidden part of this story.

“Operation Medina”

A link emerges from the 284 pages of sentence no. 13 of May 4, 2018, of the first criminal section of the Audiencia Nacional, the court of Madrid, on the “Operation Medina”. It’s the investigation on the largest carousel fraud in Spanish history, conducted by three companies including the Spanish Infinity Systems, at the time of the investigation (2006) among the largest Iberian computer retailers, with a turnover of hundreds of millions . The “Operation Medina ” involved so many defendants and companies that the Audiencia Nacional divided the case into five files, a total of 55 folders of documents. The affair lasted until this year: the last of seven sentences took place on February 25, 2022, almost all definitive because the Supreme Court rejected the appeals of some defendants, the last one dated February 2020. It led to about forty convictions after the raid in Spain and other European countries in 2006, at the end of years of investigations into the largest chain of VAT carousel scams in Iberian history. A business run by an underground network of companies that imported and traded electronic products without paying value added tax, with an estimated damage of 400 million euros for the Spanish tax authorities. The tip of the iceberg of a gigantic system that steals tens of billions of revenue from EU countries every year. That link was found by reporters of the Italian independent newspaper and media outlet Il Fatto Quotidiano on behalf of Eic, the European Investigative Collaborations network of transnational investigative journalism.

The connection: PAG Monaco

The connection passes through the Perpetual Action Group, a Monegasque anonymous company (Sam) founded by hidden shareholders in Montecarlo on December 18, 2003, with a capital of 150 thousand euros. The company went into early dissolution decided on October 30, 2009. The same day unknown shareholders appointed Giancarlo Devasini as liquidator, granting him the widest powers for an indefinite period. According to the Financial Times, in March 2010 Pag Monaco was banned from Tradeloop, the online electronics marketplace, because a month earlier an American buyer complained that he had bought memory chips for $ 2,000 from Pag and instead received “[a] box containing a large block of wood”. At the time, Devasini had vehemently denied the buyer’s claims, stating that the packages must have been tampered with during the trip and offering partial compensation. Tether claims that Devasini would have divested Pag in 2008 and would not have been involved in the company since then, only to claim that he began liquidating the business in late 2009. “This was a small business dispute from over 10 years ago, which it has nothing to do with Tether or Bitfinex,” says Tether.

The parent company: PAG Asia Inc.

However, Perpetual Action Group is not an unknown name in the news concerning Tether and Bitfinex. A Perpetual Action Group Asia Inc. was founded in 2003 in Hong Kong. Van der Velde was CEO from 2006 to April 2012. Pag Asia “exported electronic products to giant retailers such as Greatest Purchase and Tesco”. According to what Tether told the Financial Times, Pag Montecarlo and Pag Asia would not have been linked, although van der Velde and Devasini “were involved in some way with both companies”. But the Pag Asia website tells another truth: in 2009 Pag Monaco would have been the commercial and marketing headquarters in Europe of the Hong Kong company, which had production plants in Shenzen (China) and another commercial company, PAG Usa Inc. in San Dimas in California. What did Pag Asia produce? Mainly decoders for digital TV, but not only.

PAG DVD patent and the adult content business

Another curious detail comes from a European patent application filed on December 13, 2006, and recognized by the European Patent Office on June 18, 2008. The application was submitted by Perpetual Action Group Sam Monaco on behalf of the inventor Giancarlo Devasini and concerned a video DVD content protection system with integrated unlock code managed by a remote authentication server, contacted by the user. The system, called PagView, should have made sections of a standard DVD accessible, containing bonus scenes or any other type of content, only through a randomly generated code purchased via a mobile phone or the Internet and valid only for one viewing. The application was sold in April 2008 to the European arm of Hustler, the adult film and magazine company, as a pay-per-view DVD technology, “allowing companies to receive a percentage of extra revenue.” Judging by the crisis in the sector, it does not appear to have been very successful. But it is ironic thinking about Devasini as an inventor of content protection systems, given the fact that the manager was involved in two lawsuits in Italy promoted by Microsoft and Toshiba for pirated and counterfeit products.

PAG Asia Inc., the shell for unknwon Bitfinex and Tether shareholders
But Pag Asia is not just an electronic company. According to a civil lawsuit for damages launched on April 5, 2017, in the division of San Francisco, Northern District of California, by the companies that control Bitfinex (Ifinex, Bfxna, Bfxww) and by Tether against the bank Wells Fargo (which had closed banking relations at crypto company), “the owner of Tether Limited is Tether Holdings Limited in turn owned by Giancarlo Devasini, J.L. van der Velde, and DigFinex” and “the owners of iFinex Inc are DigFinex Inc. which in turn is owned by J.L. van der Velde, Giancarlo Devasini, Paolo Ardoino, Phil Potter, Stu Hoegner and Perpetual Action Group (Asia) Inc.” Pag Asia, therefore, is a safe that conceals the hidden identity of some of the shareholders of one of the largest global cryptocurrency groups.

The link to Eu VAT frauds boss, Platone
Who these shareholders were is unknown. But the name of Pag Monaco emerges from the 284 pages of sentence no. 13 of May 4, 2018, of the first criminal section of the Audiencia Nacional, the court of Madrid, on the “Medina operation”, the largest carousel fraud in Spanish history, conducted by a trio of companies including Infinity Systems which in 2006 was one of the major Iberian computer retailers, with a turnover of hundreds of millions of euros and in their computers sold to the many of the biggest retailers in Europe. On page 94 of the ruling we read that “Rino Platone’s family and business contacts in Europe, in particular with the companies Formosa SA in Switzerland, King Com Srl, in Italy, and Perpetual Action Group Sam in Monaco have enabled [the Spanish company] Infinity System SL to sell to these three companies and to [the Dutch company] Facet Europe assets for a total amount of € 54.6 million in 2005 and a total of € 38 million in 2006.”

The story of “a self-made man”
Here we enter the darkest part of this story. From the Dutch town of Zoetermeer, computer wholesaler Gennaro “Rino” Platone has been listed as “one of the Champions League players in international Vat carousel frauds for over 10 years”. Gennaro Rino Platone, born on December 26, 1972, in Gravenhage and domiciled in Zoetermeer (the Netherlands), is now on parole for the Madrid sentence, where he received three 7-month sentences each for tax fraud and one 6-month sentence for conspiracy, for a total of 27 months in prison. Inconspicuous but very efficient, Platone was the boss of a gigantic international network that, importing electronic products from China and Asia and trading them in Europe, generated a turnover of up to 500 million euros a year with his Dutch holding company Facet. Around 2005, at the time of its heyday, Platone’s wealth was in the dozen million euros and he was considered among the 15 richest men in the Netherlands, as reported on July 4, 2019, by the investigation “The fall of a Dutch VAT scammer” by journalists Dennis Mijnheer and Robert Kosters for the Dutch media Follow the Money, as a part of the special inquiry “Grand Theft Europe”.

VAT European frauds, a € 60 billion business (per year)
According to Europol, the criminal business of carousel fraud or intra-community fraud of the missing trader (Missing trader intra-community fraud, MTIC) costs € 60 billion a year to the tax authorities of European countries. Profits arise from non-payment of VAT or from fraudulent requests for VAT refunds to national authorities through “organized and sophisticated activities that seek to exploit the differences in the way VAT is treated in the different EU member states”. Criminals create a structure of individuals and related companies using legislation that gives trade beyond member states VAT exemption. This allows merchants to import goods without immediately accounting for tax. Scammers sell goods and charge VAT to the buyers but then they close the company and do not pay it to the tax authorities, while they claim and receive the refund of VAT payments that never occurred. The illicit proceeds, which even reach 23% of the final value of the goods sold, are redistributed in different shares among the criminals of the network of companies who buy and sell products without paying the tax.

Platone’s dark network
Platone, a Dutch citizen son of a Neapolitan father and a Galician mother, is a boss known to the police and investigators of many countries. Its relevance in the world of tax fraud is due, on the one hand, to its long trajectory and knowledge of this business, and, on the other hand, to its contacts both in Italy and Spain with the largest criminal organizations dedicated to carousel fraud on VAT. As international screens, he has maintained stable structures in Spain, Holland, Italy, Switzerland, France, Singapore, United Kingdom, Belgium, Dubai, Far East. He has always been considered the “owner” of the carousels, the ultimate organizer and main beneficiary of this type of criminal activity. However, as its main company Facet Trading NV is based in the Netherlands, it was not easy for the Spanish investigators at first to obtain evidence or prove of his direct involvement in the frauds. But in the Medina operation, however, Platone’s role emerged as “cooperador necesario”, an indispensable link for the realization of the “truchas”, the companies at the center of the commercial exchange network. After lengthy investigations, he was involved in the Medina operation and later in other of the most important Spanish judicial operations of the last decade against VAT fraud.

Investigations and sentences from the Netherlands to Germany
But that’s not all: “Rino” Platone was also prosecuted by the tax authorities and the Dutch Tax Police, largely on the basis of information sent by Spain, Portugal and Italy, and was investigated for 62 VAT frauds and tried for 13 cases also in Germany. After the first searches dated June 2012, which led to the seizures of assets and money in Hong Kong also, on January 15 2019 the judges of the German court in Augsburg sentenced Platone to 2 years and 10 months in prison for a fraud he stole 60 million euros to the German internal revenue system. His frauds were also the basis of an administrative doctrine of the Court of Justice of the European Communities, rooted in the Facet case with which on 22 April 2010 the High Court agreed with the Dutch Revenue Agency to hold Platone responsible for tax evasion.

The new business: solar energy
After that, since the second half of the 2000s, Platone used some of his wealth by investing in the screen and solar panel brand Yuraku (based in Singapore). Operations that led to a series of legal disputes with the Chinese company Kefeng, which for years has complained about the loss of control of Yuraku and non-payments for products sent to Platone in the Netherlands. Then Platone was the promoter of the largest solar park in Europe in the center of Sicily. In these activities there were two people connected to the Dutch boss, the Italian Maurizio Previti and the Swiss Claudio Bencivengo. Maurizio Previti, born in Alkmaar (the Netherlands) on June 21, 1973, was the manager of King Com Trading Srl of Platone and of other companies including Facet. Platone’s activities in the solar business in Italy went through a series of Chinese boxes: the Italian company Yur Power V Srl, in turn controlled by the other Italian company Yuraco Srl, then upstream from Yuraco Pte Ltd in Singapore and finally from Dutch Yuraco Holding Bv in Zoetermeer, The Netherlands. But Platone’s business in energy also included other companies: the Dutch Facet Renewable Energy Bv and Facet Solar I Srl in Busto Arsizio (Varese, Italy) and another homonymous company in Rome also registered by Arera, the Italian public agency for energy networks. Yuraku Holding was also connected to Yuraku Pte, the production company in Singapore. From the server of the Yuraku Pte website, now offline, emerges that the Singapore company in turn controlled the Italian Yuraku Srl (active in solar energy) and Yuraku Usa Inc., City of Industry, California. The American company was incorporated in May 2008 and dissolved on July 2, 2012, by Ludovicus Jan van der Velde, who was its Ceo. On December 15, 2009, a Yuraku joint venture inaugurated two solar plants of one Megawatt each in Italian Apulia region. But there is more: another connection between Devasini, van der Velde and Platone stands out from the curriculum of Alain Montilla, a former manager of these companies. The man, not searched for these investigations, worked from December 2002 to December 2005 as sales manager in Platone’s Dutch Facet Europe, then from January 2006 to November 2007 as sales manager of Perpetual Action Group Sam, the Monegasque company managed by Devasini, and then again in December 2007 he became general manager of Yuraku Pte Ltd (Singapore).

The ultimate mistery: UK VAT schemes
The last mystery in the mystery in the previous life of the Italian crypto guru ties back to the beginning. On August 30, 2006, one of Devasini’s Italian electronic products trading companies, Alcosto Spa, had purchased 1,575 memory chips from a British company. That transaction, along with dozens of others, also ended ten years later in the VAT decision of July 5, 2016, promoted by Changtel Solutions UK Ltd against the UK Revenue and Customs Office. A UK tax court found the transaction to be one of several “linked to fraudulent tax losses” under an Mtic VAT fraud scheme. However, some of the intermediary companies involved may have been unaware of the illegal purpose of the operations. “The only” fraudulent tax losses “that we are aware of were the result of the non-payment of taxes by one of Alcosto’s customers, not by Alcosto himself,” Tether told the Financial Times, arguing that Devasini was not involved.

Il Fatto Quotidiano and the EIC consortium asked Tether, Bitfinex, Devasini, van der Velde and Platone’s Spanish lawyer to comment on these events. None of them answered back.

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