Malaga province network of shell companies busted and six arrested for claiming nearly 389,000 euros in benefits

The two men identified as the main organisers have each been sentenced to two years in prison, after all six defendants admitted taking part in a scheme that used fake jobs and unpaid Social Security contributions to help people qualify for state support.

The court has described the arrangement as an "absolute simulation of non-existent employment relationships" and noted that some contracts were arranged "in exchange for payment". The SEPE employment office put the total value of the benefits obtained unlawfully at 388,990.49 euros.

The first company began operating from a home in Malaga in late 2016. It claimed to provide transport and delivery services, although it had neither industrial premises nor a fleet of vehicles.

Tax records showed activity only in 2016 and none in subsequent years, despite numerous workers continuing to appear on its books. Nor did the company have transactions with third parties or tax returns consistent with the number of employees it claimed to have.

It ran up 208,813.52 euros in Social Security debt, owed the tax authorities a further 19,064.22 and enabled the fraudulent collection of 139,513.77 in benefits.

The fictitious contracts gave access to benefits of widely varying amounts. The ruling lists beneficiaries who received 12,000, 11,000 or 10,000 euros, while others received smaller sums. Some people registered as employees never applied for any benefits at all. According to the ruling, the aim was to "fraudulently obtain unemployment benefits and allowances".

The same model appeared in other companies. One, established in January 2017, had six virtually empty bank accounts and no invoices. It accumulated 45,398.12 euros in Social Security debt and a further 38,378.50 euros in benefits paid out by the SEPE.

In another similar case, the provincial court concluded that the company's "complete lack of genuine activity" demonstrated the fictitious nature of its employment relationships.

In 2018, the network created another company which eventually had around 50 employees registered with the Social Security system. The adviser responsible for handling the registration and deregistration of 37 workers never received contracts with the supposed clients, invoices or banking records.

They were also unable to submit the company's quarterly IVA return and received only a draft withholding-tax return, without the corresponding payment. The company accumulated 300,349.93 euros in Social Security debt, enabled the fraudulent collection of 59,177.91 in benefits and ran up a further 6,720 in tax debt.

The scheme continued until 2020. In October 2019, another company was set up with an address at a house in Arriate. Its 28-year-old owner had just 240 days of Social Security contributions to his name, yet he appeared as the employer of 36 workers.

The only vehicle linked to the declared business activity was a van without valid insurance. Its accounts recorded just 2,337 euros in income in 2019, with no purchases, sales or payroll tax withholdings. The labour inspectorate declared the company fictitious and cancelled its registration in December 2020. It had accumulated 156,115.87 euros in Social Security debt, enabled 54,883.84 in benefits to be claimed unlawfully and left 28,799.66 outstanding with the tax authorities.

The final company was established in September 2020 and once again claimed to operate in the delivery sector without having sufficient resources to do so. Its Social Security debt reached 1,667.33 euros. Shortly afterwards, the network was dismantled following an investigation that began with a report from the foreigners and borders brigade (UCRIF).

The case reached the provincial court, where all six defendants admitted the offences and accepted the sentences requested by the prosecution and private parties.

The two main defendants received two-year prison sentences for a continuing offence of falsifying official documents, linked in law to a separate offence involving the fraudulent acquisition of Social Security benefits.

The court also barred them from receiving subsidies or tax or Social Security benefits for four years. The other four defendants received 18-month prison sentences and three-year bans on accessing such assistance. In all six cases, the court applied the mitigating circumstance of undue delays because of "significant delays not attributable to the defendants".

The ruling also orders the defendants to pay various amounts in compensation to the SEPE and another injured party who joined the proceedings. The court suspended the prison sentences for periods ranging from two to five years on condition that the defendants commit no further offences and meet their civil liabilities.

The court warned that if they breach those conditions, it can revoke the suspension and order them to "serve the custodial sentence in prison". The ruling is final and cannot be appealed.

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