An investigating magistrate in Thessaloniki has released two suspects under restrictive conditions as hearings continued into a 206 million euro fraud ring.
The suspects, a 39-year-old business associate and a 51-year-old woman, appeared before the 3rd special investigating magistrate of Thessaloniki on the second day of depositions into a network that allegedly defrauded the Greek state and social security funds.
Both individuals were barred from leaving the country and ordered to report regularly to a local police station. The magistrate also ordered the 39-year-old man to post a 5,000 euro bail deposit.
Investigators alleged in the judicial file that the 39-year-old suspect managed staff recruitment and cash payments for the enterprise. During his testimony, he denied any wrongdoing, stating that he was merely an employee who had no connection to the illegal activities described in the case.
Under Greek criminal procedure, an investigating magistrate conducts preliminary inquiries in major financial crimes to question suspects and decide whether to impose pre-trial detention or restrictive bail terms while prosecutors build their case.
Cleaner employment contract claim
The 51-year-old woman was named in court files as a manager or partner across 12 legal entities. She told the magistrate that she had unknowingly signed paperwork after being led to believe that the document was an employment contract to work as a cleaner.
She told the court that she only discovered later that she had been registered as the legal manager of seven companies that accumulated 1.2 million euros in unpaid debts, while also appearing as a partner in another five corporate entities.
Financial crime rings frequently exploit nominees or straw owners, often vulnerable citizens who receive little or nothing, to serve as named corporate directors. The practice allows actual business owners to shield themselves from liabilities when companies run up unpaid taxes and employee pension contributions.
Hospitality network across northern Greece
Hearings continued with the testimony of a 33-year-old businessman, while a 48-year-old lawyer scheduled to give evidence on the same day requested and was granted a postponement until tomorrow.
According to findings by the Independent Authority for Public Revenue, Greece's autonomous tax agency known as AADE, the 33-year-old ran a hospitality and catering network that operated between 2018 and 2026 across Thessaloniki and the neighbouring Chalkidiki peninsula.
Tax auditors reported that the network used 28 fictitious legal entities that appeared to operate nine physical restaurants and entertainment venues. Chalkidiki and Thessaloniki represent major tourism and dining markets in northern Greece, where seasonal cash flows can conceal illicit corporate turnover.
The indictment claims the businessman held effective control over the entire commercial operation, while formal management was passed successively through front companies run by figureheads. Whenever an entity accumulated substantial liabilities to tax authorities and social security bodies, the operation was shifted to a fresh company structure.
Accountant remanded in custody
The latest appearances follow testimony from seven defendants on the opening day of proceedings. A 34-year-old suspect, identified in court as the owner of an accounting office, was remanded in pre-trial custody.
The remaining six defendants from the first day were released under restrictive measures, including two alleged front men who denied involvement and four business owners who presented differing explanations for their actions.
Some of the business owners rejected any wrongdoing, others admitted to certain facts while disputing the legal charges against them, and some claimed their accumulated debts stemmed from commercial difficulties suffered during the coronavirus pandemic.
Authorities have arrested 16 people in connection with the investigation so far, while the formal case file compiled by Greek judicial officials lists more than 1,200 individuals.
