ESBU halts scheme involving front directors and tax minimisation

 A resident of the Vinnytsia region, who registered a company in his name using knowingly false information, will stand trial. Detectives of the Territorial Office of the Economic Security Bureau of Ukraine in the Odesa region have completed an investigation into the forgery of documents submitted for the state registration of legal entities and individual entrepreneurs.

The investigation established that the man submitted documents containing false information to a state registrar. Unaware of the unlawful nature of these actions, the registrar updated the records for the company, which is engaged in the construction of roads and highways.

As a result, the suspect formally became the founder and director of the enterprise. However, he had no intention of actually managing the company, conducting its business activities, utilizing the office, using the enterprise's contacts, or contributing funds to the authorized capital.

For participating in the scheme, the man received a reward of 500 USD.

The registration of the enterprise in the name of a front person enabled other individuals to use it for illicit activities. The company's details were utilized to minimize the tax burden. Through the firm, non-cash funds were converted into cash for enterprises within the real sector of the economy.

Previously, ESBU detectives had already completed a pretrial investigation regarding the former nominee head of the exact same enterprise. However, the individuals who organized the scheme, and who are the subject of separate criminal proceedings, decided to re-amend the company's registration documents and registered another front person as the company director.

In the course of the subsequent investigation, ESBU detectives uncovered the operational mechanism of the scheme, documented the involved individuals, and shut it down. Currently, the illicit use of the enterprise has been halted, and the organizer of the scheme has been notified of suspicion of committing a criminal offense under Part 3 of Article 27, Part 2 of Article 205-1, and Part 3 of Article 27, Part 3 of Article 212 of the Criminal Code of Ukraine, and has been placed on the wanted list.

The fictitious head of the company has been notified of suspicion of committing a criminal offense under Part 2 of Article 205-1 of the Criminal Code of Ukraine (forgery of documents submitted for the state registration of legal entities and individual entrepreneurs). The indictment has been forwarded to the court.

The sanction of the article provides for a punishment in the form of a fine from eight thousand to ten thousand tax-free minimum incomes of citizens, or imprisonment for a term of three to five years, with or without deprivation of the right to hold certain positions or engage in certain activities for a term up to three years.

Procedural guidance is provided by prosecutors from the Odesa Regional Prosecutor's Office.

It should be noted that, according to Article 62 of the Constitution of Ukraine, a person is presumed innocent of committing a crime and cannot be subjected to criminal punishment until their guilt is proven in accordance with the law and established by a court verdict of conviction.