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15th February 2025
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Most acquitted in golden passports fraud case

A Nicosia criminal court on Thursday acquitted most of the defendants in a case concerning the disgraced Golden Passports scheme, ruling that the charges of conspiracy to defraud the state were not proven beyond reasonable doubt.

The case involved the naturalisation of a foreign national named Mohamed Salem, as well as two of his relatives – Bahaa Salem and Esraa Salem. Salem had invested in Cyprus to obtain a Cypriot passport.

In August last year, Salem and a further seven individuals saw their golden passports go up in smoke and their Cyprus citizenship revoked as investigators uncovered discrepancies in the personal data submitted to the authorities.

Salem himself was not a defendant in the trial. The defendants included property developers, businesspeople, and solicitors who had facilitated the citizenship application. At the time, the requirement for obtaining citizenship was a €2 million investment in real estate.

According to prosecutors, the defendants had allegedly conspired to defraud the state by submitting forged documents, falsely claiming the €2 million investment criterion had been met. The alleged offences occurred at various times between 2017 and 2019.

However, the court found no evidence of intent to defraud the Republic. Instead, it identified irregularities and mistakes in the documentation submitted.

As a result, the court acquitted the following defendants of the charge of conspiracy to defraud: solicitors Fotos Tsangarides and Elli Michaelidou, Michalis Michael – the director of the Zavos Group – and the companies PHC Tsangarides LLC and Fullserve Secretarial Ltd.

Nevertheless, the court found two of the defendants guilty of fraudulent avoidance of VAT. These were Michalis Zavos, CEO of Larina Estates Ltd, and Larina Estates itself.

The court determined that these defendants had deliberately concealed invoices relating to the sale of apartments. These properties, as it transpired, were not used as permanent residences by the foreign investor.

Under the applicable law, sales of real estate intended as permanent residences for the purposes of the naturalisation programme were subject to a reduced VAT rate.

The inquiry into the citizenship-by-investment programme, more commonly known as the Golden Passports scheme, was completed in June 2021.

A damning report put together by a probe committee headed by former supreme court judge Myron Nikolatos said over half (53%) of the 6,779 golden passports were granted illegally, encouraged by a due diligence vacuum or insufficient background checks.

 

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