Lycamobile's French Companies Fined for Money Laundering and VAT Fraud

Lycamobile’s French Companies Fined for Money Laundering and VAT Fraud

The former CEO has been jailed for three years

In a landmark ruling, Lycamobile’s French companies have been fined a total of €10m by a Paris court for their involvement in money laundering and VAT fraud. The case also saw the group’s former CEO, Christopher Tooley, receiving a prison sentence and a substantial fine for his role in the VAT fraud scheme.

The court’s decision comes four months after the conclusion of the trial, during which it was revealed that the companies had knowingly participated in a complex and intricate system of money laundering that took place between 2014 and 2016, involving a staggering €17m.

This elaborate system relied on a network of shell companies, Lycamobile salespeople, and resellers operating in the Parisian district of La Chapelle. The primary objective of this operation was to facilitate construction companies in making illegal, cash payments to their employees.

The companies were found guilty of deceiving tax authorities by exploiting a legal VAT exemption scheme intended to promote competitiveness. This misuse of the VAT exemption allowed them to reduce costs, gaining an unfair advantage over their competitors.

The consequences were severe for those involved in the scheme. Christopher Tooley, the former CEO, was sentenced to three years in prison, fined €250,000, and banned from managing any business for the next five years. Lycamobile’s General Manager in France, Alain Jochimek, also faced significant penalties, including a three-year prison sentence, with eighteen months to be served under electronic surveillance, and a €120,000 fine. He, too, was barred from managing any business for five years.

Eight others connected to the case received penalties ranging from suspended sentences to 18 months under electronic surveillance, along with fines ranging from €5,000 to €20,000.

However the French State’s claim for damages amounting to €7.9m was dismissed by the court. The court’s rationale was that its responsibility was not to compensate for tax fraud but for fraud in general, sparking discussions about the legal framework for seeking compensation in cases of fraud.

Lycamobile is appealing.

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