Dozens of second-hand stores involved in massive tax evasion scheme - Bureau of Economic Security

To minimize tax liabilities, the retail network's operations were officially registered under more than 530 controlled sole proprietors operating on a simplified tax system. The estimated budget losses amount to over $990k.

The investigation established that the second-hand network effectively operated as a single centralized company with shared financial and operational control.

However, sales were officially processed through dozens of sole proprietors registered across various regions of Ukraine. Once these entrepreneurs exceeded their allowable income limits, they were not transferred to the general taxation system as required by law. Instead, they were continuously used to fragment the business and reduce the overall tax burden.

Analysts determined that between 2023 and 2025, 23 sole proprietors were drawn into the scheme, processing financial transactions worth over $5.9 million. According to preliminary estimates, these actions cost the state budget more than $990k in lost VAT.

ESBU detectives conducted 23 searches across Rivne, Volyn, Vinnytsia, Kyiv, and Khmelnytskyi oblasts — targeting business premises, the suspects' residences, and facilities allegedly used to coordinate the retail network.

During the raids, authorities seized data storage devices containing records for over 530 sole proprietors spanning 2024 to 2026. This evidence points to systematic business fragmentation and the use of controlled entrepreneurs to illegally minimize taxes.

The pre-trial investigation is ongoing. Operational support is being provided by the Strategic Investigations Department of the National Police in Khmelnytskyi Oblast, with procedural guidance from prosecutors at the Prosecutor General's Office.

According to further details from the National Police's Strategic Investigations Department, the scheme was orchestrated by an entrepreneur with interregional connections who resides in China and controls the company, working alongside a co-organizer based in Austria. The illegal operation also involved the network's executive director, an IT specialist, accountants, and regional representatives.

Regional managers routinely transferred cash from the stores to responsible parties through "gray" currency exchange offices.

Specially developed software played a crucial role in the scheme, allowing store employees to selectively ring up purchases through the official fiscal system based on customer behavior. All of this data was stored on foreign servers, effectively concealing the true sales volumes and minimizing tax obligations.