Brazil Police Crack Down on Tax Scheme 11/28 06:09

   

   SAO PAULO (AP) -- Brazilian police launched Thursday a police operation to 
dismantle a major tax evasion and money-laundering scheme in the fuel sector. 
The group under investigation is the country's largest tax debtor, owing more 
than 26 billion reais ($4.8 billion), authorities said. Local and state 
authorities are carrying out 126 search and seizure warrants targeting 
individuals and companies in five states. According to Brazil's Federal 
Revenue, the organization used its own companies, investment funds and offshore 
entities to hide and shield profits.

   Officials did not name any individuals or companies targeted, but local 
media reported the operations under investigation involve Grupo Fit, a fuel 
refinery. Grupo Fit did not immediately respond to a request for comment from 
The Associated Press.

   Finance Minister Fernando Haddad said Thursday's actions stem from a recent 
crackdown on criminal links to Brazil's fuel supply chain. In August, 
authorities flagged 40 fuel-sector investment funds allegedly used to hide 
assets for members of the First Capital Command crime syndicate, or PCC.

   PCC is Brazil's biggest and most powerful organized crime group. It was 
founded in 1993 by hardened criminals inside Sao Paulo's Taubate Penitentiary 
to pressure authorities to improve prison conditions. It quickly started using 
its power to direct drug dealing and extortion operations on the outside. Over 
the past few years, the gang has diversified their investment portfolios into 
various illicit markets.

   Haddad said that investigations have since identified a pattern of capital 
flight that included opening investment funds in the United States. Federal 
authorities said they identified more than 15 U.S.-based offshores sending 
roughly 1 billion reais ($186 million) back to Brazil to buy equity stakes and 
real estate.

   Suspects set up money-laundering operations in Delaware, which the finance 
minister called "a tax haven in the United States" used for "a serious 
international triangulation scheme." One of the group's latest operations 
involved 1.2 billion reais ($223 million) sent to funds in the U.S. state, he 
added.

   "The scheme works like this: Loans are issued to these funds -- loans 
suspected of never being repaid -- and the money then returns to Brazil as 
supposedly legal investments in economic activities," Haddad said. "But the 
money sent abroad is not legitimate."

   Haddad said he pledged to President Luiz Incio Lula da Silva to seek deeper 
international cooperation with the United States against organized crime and 
money laundering, amid tariff negotiations with U.S. President Donald Trump.