P044. Fraud in EU Recovery Funds: Organized Crime and Corporate Infiltration in Misappropriating Public Resources

• In Event: Poster Session & Ice Cream Social

Abstract

The European Union’s Recovery and Resilience Facility (RRF), designed to support post-pandemic recovery, has also created opportunities for fraudulent actors, including organized crime (OC) networks. This research investigates whether increased EU spending has led to a rise in the foundation or infiltration of companies for fraudulent purposes, with a particular focus on organized crime’s strategic adaptation.

Building on organizational crime theory (Needleman & Needleman, 1979) and rational choice theory (Paternoster & Simpson, 1993), the study examines how structural vulnerabilities in fund allocation enable fraud. It distinguishes between OC and non-OC actors, analyzing their methods, motivations, and effectiveness in exploiting these funds.

The research employs a risk-scoring model based on logistic regression and Maximum Likelihood Estimation (MLE) to assess fraud risk in three company categories: newly founded firms, firms with ownership changes, and stable firms. The analysis incorporates financial anomalies, ownership opacity, and regional crime density to detect fraud patterns.

Findings are expected to show that organized crime employs more sophisticated infiltration strategies, leveraging financial secrecy and professional networks, while non-organized actors engage in more opportunistic fraud. This study aims to inform anti-fraud policies, strengthening oversight mechanisms and enhancing risk detection in large-scale public funding programs.

Author

• Davide Bremi, Transcrime - Università Cattolica