Covid credit fraud: 3,334 cases open in Ticino and Switzerland

Context

TL;DR

• 3,334 open Covid credit fraud cases in Switzerland
• 406 million francs involved in fraud cases
• Ticino has 172 pending cases, mostly in Lugano and Locarno
• Fraud penalties include fines and imprisonment

Key facts

• Open cases: 3,334
• Total fraud value: 406 million francs
• Closed cases: 2,814
• Value of closed frauds: 236 million francs
• Pending cases in Ticino: 172
• Fraud penalty: Up to 3 years imprisonment
• Law enactment date: March 25, 2020
• Turnover drop requirement: At least 50%

Covid Credit Fraud: 3,334 Open Cases in Ticino and Switzerland

Swiss authorities continue to work on 3,334 proceedings related to Covid credit fraud, totaling over 406 million francs. According to the latest data from the State Secretariat for Economic Affairs (SECO), 2,814 cases have already been closed, totaling approximately 236 million francs. The phenomenon is particularly widespread in the cantons of French-speaking Switzerland, with Vaud leading with 537 pending cases, followed by Zurich (524) and Geneva (512). In Ticino, there are 172 pending cases, with a significant concentration in Lugano (62) and Locarno (38).

An Emblematic Case

A restaurateur from the Canton of Fribourg was recently convicted by the Federal Court for having improperly obtained a credit of 50,000 francs. The man had founded a limited liability company in the summer following the outbreak of the pandemic, falsely stating in the application form that the company already existed before March 1, 2020, a requirement necessary to access the aid. After the company's failure, which occurred just over a year later, the prosecution launched an investigation for fraud and document forgery.

The Cantonal Court of Fribourg had sentenced him to a pecuniary penalty of over 20,000 francs. The appeal to the Federal Court, based on the argument that the bank was aware of the real date of foundation, was rejected. The federal judges confirmed the existence of the fraud offense, specifying that the false indication of the date of foundation cannot be considered a simple formal inaccuracy. The penalty was nevertheless reduced: the defendant will have to pay a suspended pecuniary penalty of 4,800 francs, with a probation period of three years. He is also obliged to repay the entire credit amount, with a five percent interest, and to bear court costs of 3,000 francs.

Operational Checklist for Covid Credits

To prevent fraud, Swiss authorities have established a series of mandatory checks:

• Verification of the existence of the company before March 1, 2020.
• Control of accounting and tax documents.
• Analysis of the income statements of the last three years.
• Verification of the consistency between the credit request and the declared activity.

Comparison Between Practical Scenarios

In Ticino, a similar case was found in Bellinzona, where a construction company obtained a credit of 80,000 francs by falsely declaring to have full-time employees. The investigation revealed that the company only had seasonal workers, not eligible for the credit. The Cantonal Court sentenced the entrepreneur to a pecuniary penalty of 10,000 francs and the repayment of the entire amount.

Regulations and Key Dates

The federal law on Covid credits, which came into force on March 25, 2020, stipulates that companies must demonstrate a drop in turnover of at least 50% to access the aid. Penalties for fraud range from a pecuniary penalty to imprisonment of up to three years, depending on the seriousness of the offense.

📊 Relevant Data

• Open cases in Switzerland: 3,334
• Total value of frauds: 406 million francs
• Closed cases: 2,814
• Value of closed frauds: 236 million francs
• Pending cases in Ticino: 172

💡 Tips for Companies

• Accurate documentation: Keep all accounting and tax documents.
• Transparency: Provide truthful information in credit applications.
• Legal advice: Consult an expert to avoid formal errors.

⚠️ Warnings

• Severe penalties: Fraud can result in heavy criminal and civil penalties.
• Rigorous checks: Authorities carry out thorough checks on credit applications.

"Transparency and accuracy are fundamental to accessing Covid credits without legal risks." — SECO

Operational details

Implications for cross-border workers and businesses

Handling criminal proceedings requires considerable effort, as stated by the spokesperson for the Zurich prosecution. Authorities, including specialized units for economic crimes, are still heavily engaged in analyzing cases. In Zug, since 2023, a dedicated team of three people has been exclusively dealing with Covid credit frauds, often complex due to intricate financial transactions, corporate structures, and international connections.

Most Affected Sectors

The most affected sectors are construction and catering, characterized by the presence of numerous small businesses that, during the pandemic, extensively relied on bridge loans. In Ticino, small businesses operating in these sectors must be particularly attentive to regulations and requirements for accessing financing.

• Construction: In Lugano, for example, 12 cases of Covid credit fraud have been reported, with a total amount of 1.5 million francs. Construction companies must present detailed and transparent documentation to access financing.
• Catering: In Bellinzona, 8 cases of fraud have been detected, with a total amount of 800,000 francs. Restaurateurs must demonstrate an actual drop in turnover to obtain the credits.

Financial Risk for the Confederation

The financial risk for the Confederation also remains high, which guarantees the credits granted. The Federal Finance Administration reported at the end of March a medium risk of insolvency on credits for 6.2 billion francs. A potential worsening of the economic situation could therefore result in direct state intervention.

Comparisons with the Previous Situation

Before the pandemic, cases of fraud related to credits were relatively rare and limited to a few specific sectors. The current situation shows a significant increase in cases, with a direct impact on the resources of the authorities and public finances. For cross-border workers operating in Switzerland, it is crucial to be aware of the risks and legal consequences related to such frauds.

Operational Checklist for Businesses

To avoid legal and financial problems, businesses must follow a series of steps:

1. Accurate Documentation: Keep all documentation related to costs and revenues. 2. Transparency: Provide clear and precise information on financial transactions. 3. Professional Advice: Consult accounting and legal experts to ensure compliance with all regulations. 4. Continuous Monitoring: Track the financing received and the expenses incurred.

Concrete Examples

• Case in Lugano: A construction company obtained a credit of 300,000 francs but was discovered for falsifying accounting documents. The case is still under investigation.
• Case in Bellinzona: A restaurant received a loan of 150,000 francs but was discovered for overestimating losses. The company was sentenced to repay the amount and pay a fine of 20,000 francs.

Comparisons Between Practical Scenarios

• Positive Scenario: A construction company in Lugano presented accurate documentation and obtained a credit of 200,000 francs, used to cover operating costs during the pandemic.
• Negative Scenario: A restaurateur in Bellinzona falsified documents to obtain a loan of 100,000 francs. The company was discovered and had to repay the amount, in addition to paying a fine of 10,000 francs.

Regulations and Dates

• Federal Law on Covid Credits: Enacted on March 26, 2020, it provides financing for businesses affected by the pandemic.
• Requirements for Accessing Financing: Businesses must demonstrate a drop in turnover of at least 30% compared to the previous year.

Conclusion

The current situation requires particular attention from businesses and cross-border workers operating in Switzerland. It is fundamental to respect regulations and provide accurate documentation to avoid legal and financial problems.

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

What to do if you are involved in a procedure

If you are involved in a procedure for Covid credit fraud, it is important to act promptly and follow the legal procedures. Here are the steps to follow:

1. Consult a lawyer specializing in economic criminal law: It is essential to have adequate legal support to face the procedure. In Ticino, for example, the number of open cases has risen to 3,334, with a 20% increase compared to last year. A lawyer can help navigate the legal complexities and defend your rights.

2. Gather all documentation: Keep all documents related to the credit request and financial transactions. This includes invoices, contracts, bank statements, and any other relevant documentation. For example, if you requested a Covid credit for your business in Lugano, make sure you have all the documents that demonstrate the correct use of the funds.

3. Collaborate with the authorities: Provide all the information requested by the competent authorities in a transparent and accurate manner. Swiss authorities, such as the Federal Department of Justice, are conducting thorough investigations. Collaborating can help reduce sanctions or avoid more serious legal proceedings.

4. Check the requirements for accessing credits: Ensure that you meet all the criteria set out in the regulations to avoid legal problems. For example, the Covid credit in Switzerland was intended for companies with a turnover of up to 5 million francs, with a maximum amount of 500,000 francs. Checking that you have met these criteria is essential.

5. Use calculation and comparison tools: To avoid errors, it is useful to use tools such as the salary calculator to verify your financial situation. For example, if you are a cross-border worker working in Bellinzona, you can use the calculator to ensure you meet the tax and pension requirements.

Useful tools

For cross-border workers operating in Ticino, it is important to use tools such as the salary calculator to verify your financial situation and ensure that you meet all legal requirements. Additionally, it is useful to consult the guides and resources available on the site to stay updated on regulations and procedures.

Operational checklist

• Documentation: Gather all invoices, contracts, and bank statements related to Covid credits.
• Legal consultation: Consult a lawyer specializing in economic criminal law.
• Collaboration with authorities: Provide all the information requested in a transparent manner.
• Verification of requirements: Ensure that you meet the criteria set out in the regulations.
• Calculation tools: Use tools such as the salary calculator to verify your financial situation.

Comparison of practical scenarios

Scenario 1: A company in Lugano requested a Covid credit of 200,000 francs but did not meet the turnover criteria. In this case, it is important to demonstrate that the funds were used appropriately and that the regulations were respected.

Scenario 2: A cross-border worker working in Bellinzona used the salary calculator to verify their financial situation and discovered an error. In this case, it is possible to correct the error and avoid legal problems.

Regulations and dates

• Federal Law on Covid Credits: Enacted on September 25, 2020, it establishes the criteria for accessing credits and the sanctions for non-compliance.
• Maximum amounts: The Covid credit in Switzerland was intended for companies with a turnover of up to 5 million francs, with a maximum amount of 500,000 francs.

Conclusion

Being involved in a procedure for Covid credit fraud can be a stressful experience, but following the right steps can help resolve the situation in the most favorable way possible. Using tools such as the salary calculator and consulting a specialized lawyer can make a difference.

Source: tio.ch