An Italian investment fraud investigation has taken on international dimensions, with links to Cyprus, after Italian authorities arrested a man from the Forlì area over alleged illegal financial activity, fraud and money laundering affecting 168 small investors.
According to Italian news agency ANSA and Il Resto del Carlino, investigators estimate that around €4.7 million was invested through the scheme. Assets worth approximately €5.3 million had previously been seized as a precautionary measure, in connection with the alleged illicit proceeds.
Companies based in Cyprus
The alleged movement of funds has brought Cyprus into focus.
According to information released by Italian authorities, proceeds from the activities under investigation were linked to companies based in Cyprus, Malta, Luxembourg and the United Kingdom.
Bank accounts held with financial institutions in several European countries and in jurisdictions described as tax havens were also allegedly used.
Investigators say some of the money was reinvested in cryptocurrencies, while other amounts were allegedly used for personal expenses.
The information published so far does not identify the Cyprus-based companies and does not indicate that Cypriot companies or financial institutions are accused of participating in the alleged fraud.
Promises of high returns
The investigation began in February 2024 and involved, among other measures, the examination of 160 complaints, mainly from small investors living in the Romagna area.
Italian authorities said three people were reported in connection with the investigation, while the main suspect is also accused of subsequent money laundering activity.
The scheme was allegedly developed mainly through personal contacts and word-of-mouth recommendations. Investors were attracted by promises of particularly high returns and transferred funds that were subsequently directed to accounts abroad.
When investors attempted to recover their money, the main suspect had allegedly disappeared.
Alleged Ponzi-style scheme
According to the Guardia di Finanza, the case displays characteristics of a Ponzi-type pyramid scheme.
In practice, returns allegedly paid to early investors were funded by money deposited by newer clients rather than by actual profits from investment or other productive activities.
Investigators traced the financial flows through banking investigations and cooperation with supervisory authorities in other countries.
According to the allegations, the necessary licences to provide the financial services concerned in EU and third-country markets were not in place.
Arrest following Italian court ruling
The main suspect was arrested in Sarzana, in the province of La Spezia, following a pre-trial detention warrant issued by a judge at the Forlì court.
The warrant became enforceable on September 15 following a ruling by Italy’s Court of Cassation.
The charges include alleged illegal financial activity, fraud and money laundering. The investigation is continuing as authorities seek to fully trace the international movement of the millions of euros involved.
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