ORDER GRANTING MOTION FOR CERTIFICATE OF EXTRADITABILITY

[Re: Dkt. 49, 57]

HOWARD R. LLOYD, Magistrate Judge.

The United States, on behalf of the Federal Republic of Germany (Germany), seeks the extradition of Samir Azizi. Azizi is charged in Germany with 89 counts of tax evasion — i.e., 77 counts of providing tax authorities with incomplete or incorrect statements about tax-relevant facts and 12 counts of failing to inform them about tax-relevant facts, acting contrary to duty — in violation of Section 370, subsection no. 1 and no. 2, subsection 3 sentence 2 no. 1 and no. 5 of the Fiscal Code of Germany in connection with Sections 18 of the Turnover Tax Act of Germany, 22, 23, 25 subsection 2, 53 of the Penal Code of Germany, and Sections 1, 105 ff of the Juvenile Justice Act of Germany. According to the German government, between April 30, 2008 and April 10, 2012, Azizi evaded €61,104,368.00 in value added taxes (VAT). As will be discussed more fully below, the authorities contend that Azizi, acting as de facto managing director of eleven different companies,1 was obliged to file tax returns pursuant to Sections 34, 35, 149, and 150 of the Fiscal Code. But, they allege that Azizi failed to file tax returns, fraudulently claimed refunds of VAT, and evaded payment of VAT. The charges are based on allegations of gang-based tax evasion via so-called "Missing Trader Intra-Community" fraud, also known as "carousel" fraud. The government's extradition request is made pursuant to the extradition treaty (and supplementary treaties) in full force and effect between the United States and Germany.2 For the reasons discussed below, the government's motion for a certificate of extraditability is granted.3

BACKGROUND

A. Events Leading to Azizi's Arrest

According to the Request for Extradition (RFE), the investigation of Azizi and others began with a December 10, 2007 report of suspected money laundering, made by the Cologne District Savings Bank to the North Rhineland-Westphalia Regional Criminal Police Office. This court is told that the report concerned Azizi's sister, Hosai Azizi, who was the official managing director of WOC GmbH (WOC), the company allegedly involved in the suspected laundering. The government says that money laundering was suspected because (1) sales of approximately €1.7 million were made after the account opened in May 2007; (2) most of the cash sales were for cell phones; and (3) some payment transactions having been executed in a different country, there were indications that WOC was involved in a carousel fraud. (RFE 12). Investigation of WOC and Hosai Azizi led to Samir Azizi.

Authorities say that they obtained court orders and searched WOC's business premises and Azizi's homes. After review of the documentary evidence seized in those searches, the government says it found other indicators of carousel fraud. For example, according to the RFE, in some instances WOC did submit VAT returns for intra-Community purchases (i.e., transactions between different members of the European Union (EU)). But, the government says that amounts for purchases reported in October 2008 to December 2008 (€2,999,271.00) differed significantly from amounts reported by the supplier for the fourth quarter of 2008 (€1,546,765.00) through the VAT information exchange system known by the acronym MIAS (Mehrwertsteuerinformationsaustauschsystem). Most notably, says the government, a comparison of the purchase and sale prices for individual cell phones revealed that the net purchasing prices were higher than the net selling prices. In other words, the cell phones were resold below their cost. According to the government, that is an indicator that a profit margin could only be realized from unlawfully undeclared and unpaid VAT. (RFE 12-13).

In the course of their searches, authorities say that they determined that he and most of his family members had already applied for new passports, left the premises, and were in the process of leaving Germany. (RFE 13). On May 12, 2010, authorities obtained warrants for the arrest of Samir and Hosai Azizi for tax-related crimes concerning WOC. Hosai Azizi was arrested. Samir Azizi, however, became a fugitive and was placed on the wanted list. (Id.).

Azizi nevertheless remained in contact with the investigating authorities through his defense attorney. And, the government says that he initially appeared to be cooperating in the investigation, possibly to benefit from a mitigation of punishment. (RFE 15). During the course of the government's investigation, Azizi was interviewed, and he made statements to the authorities.4 According to the government, Azizi subsequently broke contact with his solicitor and fled. (RFE 93).

On January 9, 2014, the Local Court in Cologne issued a warrant for Azizi's arrest; and, through diplomatic channels, Germany asked the United States for the provisional arrest of Azizi with a view toward his extradition. On March 31, 2014, the United States, on Germany's behalf, filed in this district a Complaint for Provisional Arrest with a View Toward Extradition. Later that same day, a magistrate judge of this district issued a provisional arrest warrant, and United States marshals arrested Azizi at the San Francisco International Airport after he disembarked a flight from Dubai.

At his preliminary appearance on April 1, 2014, this court ordered that Azizi be held without bond. Over the next several months, Azizi filed a motion to be released on bail, as well as a motion and supplemental motion to terminate his provisional arrest — all of which were denied.5 In the meantime, Germany submitted its formal Request for Extradition and supporting documentation to the court.

The court subsequently set a briefing and hearing schedule, prepared with the input of both sides and without objection as to the designated deadlines. That schedule included a November 14, 2014 filing deadline for Azizi's extradition brief and a November 21, 2014 extradition hearing.

B. Azizi's Request for a Continuance

Azizi never filed his brief. Instead, late on the day his brief was due,6 he requested a continuance of at least 60 days, stating that he needed more time to submit evidence "explaining" the charges. (Dkt. 49). The court directed him to make an offer of proof. He did so.7 The United States opposed Azizi's requested continuance and objected to his proffer. After having considered the moving and responding papers, as well as the oral arguments presented, the court denied Azizi's motion for a continuance on the record at the November 21, 2014 extradition hearing. That ruling is memorialized here.

Azizi's right to produce evidence at an extradition hearing is limited. In re Extradition of Sindona, 450 F.Supp. 672, 685 (S.D.N.Y. 1978). "While the formal rules of evidence do not apply, the extradition judge's discretion must be exercised consistent with the distinction between contradictory and explanatory evidence." In re Extradition of Trinidad, 754 F.Supp.2d 1075, 1081 (N.D. Cal. 2010). "Generally, evidence that explains away or completely obliterates probable cause is the only evidence admissible at an extradition hearing, whereas evidence that merely controverts the existence of probable cause, or raises a defense, is not admissible." Barapind v. Enomoto, 400 F.3d 744, 749 (9th Cir. 2005) (quoting Mainero v. Gregg, 164 F.3d 1199, 1207 n.7 (9th Cir. 1999)); see also Trinidad, 754 F. Supp.2d at 1081 (same). "Admission of evidence proffered by the fugitive at an extradition proceeding is left to the sound discretion of the court, guided of course by the principle that evidence of facts contradicting the demanding country's proof or establishing a defense may properly be excluded." Hooker v. Klein, 573 F.2d 1360, 1369 (9th Cir. 1978).

While courts recognize that the distinction between "contradictory" and "explanatory" evidence is murky, the purpose behind the rule is clear:

Sindona, 450 F. Supp. at 685; see also Koskotas v. Roche, 931 F.2d 169, 175 (1st Cir. 1991) (stating that "it is well established that extradition proceedings are not to be converted into a dress rehearsal trial.") (citation and quotations omitted). Thus, attacks on credibility, evidence establishing a defense to the merits of the charges, and evidence that does not accept the requesting country's evidence as true are considered "contradictory," not "explanatory," evidence. This is so because "[i]t is well-established that an extradition magistrate `does not weigh conflicting evidence and make factual determinations but, rather, determines only whether there is competent evidence to support the belief that the accused has committed the charged offense.'" In re Extradition of Solis, 402 F.Supp.2d 1128, 1132 (C.D. Cal. 2005) (quoting Quinn v. Robinson, 783 F.2d 776, 815 (9th Cir. 1986)). The extradition proceeding "is designed only to trigger the start of criminal proceedings against an accused; guilt remains to be determined in the courts of the demanding country." Valencia v. Limbs, 655 F.2d 195, 198 (9th Cir. 1981) (internal quotations and citations omitted).

Azizi identified three categories of evidence he wished to submit through an affidavit of his German lawyer — namely, evidence he says will prove that (1) he had no obligation to file the subject tax returns because he did not serve as director of the companies in question; (2) he had little or no connection to those companies; and (3) his conduct and activities did not trigger an obligation to file tax returns under any legal theory. He requested additional time to review all of the discovery reportedly being produced by the German prosecutor in the criminal proceeding so that this court could make its probable cause determination based upon the "totality of the record." This court is unpersuaded that it must undertake that sort of review inasmuch as Germany is not required to produce all of its evidence at an extradition hearing. See Quinn, 783 F.2d at 815. In any event, it is apparent from Azizi's arguments that he wishes to submit evidence that merely controverts the existence of probable cause or establishes legal defenses to the substance of the charges. His proffered evidence therefore is "contradictory," not "explanatory," within the meaning of extradition law and is inadmissible here.

Azizi contends that he was not obliged to file the subject returns because he says German law provides that only directors are required to file returns; and, he claims he was not a director of any of the companies in question. Germany holds a different view. The government contends that Azizi acted as de facto managing director and that German caselaw provides that he must be recognized as the managing director. (See, e.g., RFE 20-21). And, according to prosecutor Brorhilker, Sections 34, 35, 149, and 150 of the German Fiscal Code provide the bases for Azizi's responsibility for filing returns. (RFE 21). Azizi wished to have his German lawyer tell this court that, in his opinion based upon the evidence, German law provides something different. But, that is a defense, or at least a legal dispute as to whether someone like Azizi properly could be deemed a managing director under German law. The proper interpretation of German law is not something which this court is equipped or authorized to address in this proceeding.

Azizi also wanted to have his German lawyer (1) tell this court that Azizi either was not involved (or was not sufficiently involved) to be responsible for filing the returns and (2) "explain" Azizi's conduct to show that nothing about his activities triggered an obligation to file returns. As will be discussed, the government holds an entirely different view; and, the RFE goes into considerable detail about Azizi's alleged involvement in the questioned transactions. Azizi's proffered evidence therefore raises significant fact issues and potential defenses and is not admissible here.

For these reasons, Azizi's request for a continuance was denied, and this court proceeded with the extradition hearing. The court asked Azizi's counsel whether they wished to present any arguments as to the merits of the government's extradition request. They said no. The matter was then deemed submitted, and the United States subsequently filed a formal motion for certification and committal for extradition.

LEGAL STANDARD RE EXTRADITION

Title 18 of the United States Code section 3184 governs extradition from the United States to a foreign country and authorizes "any justice or judge of the United States, or any magistrate judge authorized so to do by a court of the United States, or any judge of a court of record of general jurisdiction of any State" to conduct an extradition hearing under the pertinent treaty between the United States and the requesting nation and to issue a certification of extraditability to the Secretary of State.

The court's role in extradition proceedings is very limited, and "[e]xtradition is a matter of foreign policy entirely within the discretion of the executive branch, except to the extent that the statute interposes a judicial function." Vo v. Benov, 447 F.3d 1235, 1237 (9th Cir. 2006) (citations omitted); see also Blaxland v. Commonwealth Director of Public Prosecutions, 323 F.3d 1198, 1207 (9th Cir. 2003) (stating that extradition "is a diplomatic process carried out through the powers of the executive, not judicial, branch."). Where a person is brought before the court on an extradition complaint, a certification of extraditability properly is issued where:

Manta v. Chertoff, 518 F.3d 1134, 1140 (9th Cir. 2008) (citing Zanazanian v. United States, 729 F.2d 624, 625-26 (9th Cir. 1984)). If the court determines that all requirements have been met, the findings are incorporated into a certificate of extraditability, which is forwarded to the Secretary of State. 18 U.S.C. § 3184. The Secretary of State makes the ultimate decision whether to extradite the accused to the requesting country. Id., § 3186.

In carrying out its duties under § 3184, the extradition court liberally construes the pertinent treaty; and, "in the interest of justice and friendly international relationships," the treaty "should be construed more liberally than a criminal statute or the technical requirements of criminal procedure." Factor v. Laubenheimer, 290 U.S. 276, 298, 54 S.Ct. 191, 78 L.Ed. 315 (1933). As explained by the Supreme Court:

Id. at 293. Additionally, "[r]espect is ordinarily due the reasonable views of the Executive Branch concerning the meaning of an international treaty." El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155, 168, 119 S.Ct. 662, 142 L.Ed.2d 576 (1999) (citing Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 184-85, 102 S.Ct. 2374, 72 L.Ed.2d 765 (1982)).

In extradition matters, the Federal Rules of Criminal Procedure and the Federal Rules of Evidence do not apply. Fed. R. Crim. P. 1(a)(5)(A); Fed. R. Evid. 1101(d)(3); Manta, 518 F.3d at 1146; Oen Yin-Choy v. Robinson, 858 F.2d 1400, 1406 (9th Cir. 1988). Rather, the admissibility of evidence is governed by the general extradition law of the United States and the provisions of the relevant treaty. Emami v. U.S. Dist. Ct., 834 F.2d 1444, 1450 (9th Cir. 1987); Oen Yin-Choy, 858 F.2d at 1406. And, "unless the relevant treaty provides otherwise, the only requirement for evidence is that it has been authenticated." Manta, 518 F.3d at 1146; see also Emami, 834 F.2d at 1451 ("With regard to the admissibility of evidence, the general United States extradition law requires only that the evidence submitted be properly authenticated. . . .").

A certification of extradition properly may be based entirely on the authenticated documentary evidence and information provided by the requesting government, including reports and affidavits summarizing the evidence or witness statements. See, e.g., Choe v. Torres, 525 F.3d 733, 739-40 (9th Cir. 2008) (noting that the magistrate judge properly considered the Korean prosecutor's summary of witnesses' testimony); Emami, 834 F.2d at 1450-52 (upholding extradition based on the German prosecutor's affidavit containing summaries of witness statements).

"The credibility of witnesses and the weight to be accorded their testimony is solely within the province of the extradition magistrate." Quinn, 783 F.2d at 815. Hearsay evidence is admissible. Collins v. Loisel, 259 U.S. 309, 317, 42 S.Ct. 469, 66 L.Ed 956 (1922). Moreover, the self-incriminating statements of accomplices are sufficient to establish probable cause. Zanazanian, 729 F.2d at 627-28. As discussed above, "explanatory" evidence is admissible, but "contradictory" evidence is not. Barapind, 400 F.3d at 749; Hooker, 573 F.2d at 1369; Trinidad, 754 F. Supp.2d at 1081. And, the accused is not permitted to turn an extradition proceeding into a full trial on the merits. Collins, 259 U.S. at 316.

DISCUSSION

A. Authentication and the first four extradition requirements are satisfied

This court finds that all documents and evidence before it have been properly authenticated and are therefore admissible.

18 U.S.C. § 3190 addresses the authentication of documents and provides:

Certification under 18 U.S.C. § 3190, however, is not the only means by which documents may be admitted in extradition proceedings. Bovio v. United States, 989 F.2d 255, 260 (7th Cir. 1993); see also generally Desmond v. Eggers, 18 F.2d 503, 505 (9th Cir. 1927).

Article 29 of the 1978 Treaty as amended by Article 6 of the Second Supplementary 2006 Treaty also addresses authentication and provides, in relevant part: "Documents that bear the certificate or seal of the Ministry of Justice, or Ministry or Department responsible for foreign affairs, of the Requesting State shall be admissible in extradition proceedings in the Requested State without further certification, authentication, or other legalization." With respect to Germany, the term "Ministry of Justice" means the Federal Ministry of Justice. Id.

This court has received the formal extradition request from Germany bearing the seal of the Federal Ministry of Justice. Pursuant to the treaty, that is all that is required for authentication.

This court has also received supporting documents from the U.S. State Department. These documents were submitted along with a certificate bearing the seal of the State Department and certifying that Elizabeth M. Kiingi is an Attorney-Adviser of the Office of the Legal Adviser of the State Department and that full faith and credit are due to her acts as such. Appended to the certificate is Kiingi's declaration in which she, among other things, (1) attests that the formal extradition papers received from Germany bear the seal of the Ministry of Justice and require no further authentication; and (2) appends a copy of the diplomatic note from Germany requesting the extradition of Azizi, as well as a copy of the extradition treaty and supplementary treaties.

Additionally, as noted above, Germany's RFE, all supporting documents submitted by the State Department, and all supplemental pleadings of the government on file with the court, including the Report of Investigation prepared by Deputy United States Marshal Christopher Hulse (Dkt. 37) submitted through the declaration of Assistant U.S. Attorney John Glang, were formally admitted into evidence at the extradition hearing, without objection by Azizi.

Moreover, Germany has submitted all documents required by the treaty.8

Magistrate judges are authorized by 18 U.S.C. § 3184 to conduct extradition hearings, and the local rules of this district expressly permit magistrate judges to conduct such proceedings. See Trinidad, 754 F. Supp.2d at 1079 (citing Crim. L.R. 7-1(b)(13)); see also Ward v. Rutherford, 921 F.2d 286, 287-89 (D.C. Cir. 1990) (concluding that a local rule authorizing magistrate judges to conduct extradition hearings did not violate Article II of the U.S. Constitution).

This court has jurisdiction over Azizi because he is within its jurisdictional boundaries. 18 U.S.C. § 3184 (providing that the court "may, upon complaint made under oath, charging any person found within his jurisdiction . . . issue his warrant for the apprehension of the person so charged, that he may be brought before such justice, judge, or magistrate judge, to the end that the evidence of criminality may be heard and considered.").

It is undisputed that there is an extradition treaty between the United States and Germany that is, and was at all relevant times, in full force and effect.

The crime charged (tax evasion) falls within the terms of the extradition treaty. The 1978 Treaty originally specified that extraditable offenses were those listed in an appendix to that treaty. That appendix listed a number of offenses, including "offenses relating to willful evasion of taxes and duties." (Dkt. 18, Ex. A (1978 Treaty, Appendix)). The treaty subsequently was amended, essentially expanding the scope of covered offenses to include any offenses punishable under the laws of both countries:

(1993 Supplementary Treaty, Article 1(a)(1)). Thus, the treaty reflects the principle of dual criminality, which simply requires that the alleged offenses constitute a crime in both jurisdictions. Oen Yin-Choy, 858 F.2d at 1404; Emami, 834 F.2d at 1450. "To satisfy dual criminality, the name by which the crime is described in the two countries need not be the same, nor does the scope of liability for the crime need to be the same." Oen Yin-Choy, 858 F.2d at 1404 (citing Emami, 834 F.2d at 1450). "Rather, dual criminality exists if the essential character of the acts criminalized by the law of each country are the same and if the laws are substantially analogous." Id. (citations and quotations omitted). "Thus, each element of the offense purportedly committed in a foreign country need not be identical to the elements of a similar offense in the United States. It is enough that the conduct involved is criminal in both countries." Id. at 1404-05 (citations and quotations omitted).

This court readily concludes that Azizi's alleged conduct would be criminally punishable under the laws of the United States. As discussed, he is charged with tax evasion in violation of Section 370 of the German Fiscal Code, and the government alleges that he failed to file tax returns, fraudulently claimed refunds of VAT, and evaded payment of VAT. According to the RFE, Section 370 of the German Fiscal Code provides that such conduct is punishable by up to 5 years imprisonment or a monetary fine. (RFE 96-97). Such conduct is also prohibited in the United States by at least the following statutes, which concern essentially the same acts as those underlying Germany's charges and which are substantially analogous to the cited German statute:

See generally, e.g., In re Extradition of Matus, 784 F.Supp. 1052, 1055 (S.D.N.Y. 1992) (concluding that Chilean charges of VAT fraud and evasion are also crimes violating 18 U.S.C. § 287, 18 U.S.C. § 1003, and 26 U.S.C. § 7207). The principle of dual criminality is satisfied, and the offenses charged are covered by the extradition treaty.

B. There is Probable Cause to Believe that Azizi Committed the Crimes Charged

As discussed, in an extradition proceeding, "the country seeking extradition is not required to produce all its evidence at an extradition hearing and it is not [this court's] role to determine whether there is sufficient evidence to convict the accused." Quinn, 783 F.2d at 815. "The magistrate does not weigh conflicting evidence and make factual determinations but, rather, determines only whether there is competent evidence to support the belief that the accused has committed the charged offense." Id. This means that the undersigned must "determine whether there is `evidence sufficient to cause a person of ordinary prudence and caution to conscientiously entertain a reasonable belief of the accused's guilt.'" Trinidad, 754 F. Supp.2d at 1081 (quoting Coleman v. Burnett, 477 F.2d 1187, 1202 (D.C.Cir.1973)).

1. Identity

As part of its probable cause analysis, this court must determine whether the party before it is the party named in the extradition complaint. Manta, 518 F.3d at 1143; Hooker, 573 F.2d at 1367. Azizi has never argued or claimed that he is not the party named in the extradition complaint. Additionally, he has appeared in person before this court on several occasions, and he appears to be the same individual identified in photos in the RFE. (RFE 16, 84, 110). Moreover, the Report of Investigation of Deputy United States Marshal Christopher Hulse reveals that Azizi told Deputy Hulse that he obtained German citizenship sometime between 2003 and 2004; that he lived in Germany until 2006; that he was the manager of an electronics company in Germany called WOC GmbH; that he was the sales manager of a company called Wega Mobile; that his cousin Habib Soori was the owner of iTrading GmbH, iCell Gmblt and Co KG, AS Handel GmbH, and My iCell Gmblt; that his brother, Selaiman Azizi, was the co-owner of Nexo Chakfa GmbH with Yusuf Güles; and that he also has a sister, Hosai Azizi, and another brother, Said Azizi. (Dkt. 37 at 6). These relatives and companies are mentioned throughout the RFE. (See, e.g., RFE at 2, 12, 17-20, 30, 58-59, 63-64, 89). Further, the government says that the unredacted copy of Deputy Hulse's report reveals that Azizi gave him the same birthdate as the one specified in the RFE (RFE 111). Azizi, who was given a copy of the unredacted report (see Dkt. 37 at 3), has never challenged that assertion. The undersigned finds that Azizi is the party named in the extradition complaint.

2. VAT Overview

As its name suggests, VAT essentially is a tax on the value added to a product, imposed at each stage in the supply chain, from manufacture to delivery of the finished product to the final consumer. "The VAT is somewhat like U.S. sales tax in that it is based upon the value of a physical good. Unlike, the U.S. sales tax, however, the VAT is imposed at each step in production, from the processing of raw materials to the distribution of final products." Matus, 784 F. Supp. at 1055. Each seller in the supply chain charges customers VAT based on the value it has added to the product. For each buyer in the supply chain, the VAT is a tax on the purchase price paid. Each seller in the chain must report its sales and pay to the government the VAT due, but may deduct from that payment any VAT it already paid on the product. The VAT a business pays to another business for supplies is called "input VAT." (RFE 2). When that business, in turn, sells its goods, it charges customers VAT on the value it added to the products. And, that business must also report its sales and pay the relevant VAT due at that stage in the chain, but it may deduct from that payment the input VAT it paid to its supplier. (RFE 2). In this way, goods make their way through the chain, with each buyer and seller reporting sales and paying the relevant VAT at each step. Ultimately, the VAT is borne entirely by final consumers, who cannot deduct any VAT from their purchases. (RFE 3).

According to the RFE, special rules apply to goods that are imported or exported between different countries. For imports/exports between different EU members (i.e., intra-Community transactions), this basically means:

These rules reflect the principle that VAT should be collected in the country where the end-consumer ultimately acquires the goods. (RFE 3-4). Once a good is imported, the domestic business sells it downstream through a supply chain as usual, and VAT is collected at each step, as described above.

3. Missing Trader Intra-Community Fraud/Carousel Fraud

Because of the way in which VAT is treated on transactions between different EU countries, VAT is vulnerable to certain types of fraud. Germany alleges that Azizi accomplished the charged tax offenses through gang-based "Missing Trader Intra-Community" (MTIC) fraud, also known as "carousel" fraud, in which criminal gangs illegally attempt to obtain refunds of input tax. (RFE 4). According to the government, this kind of fraud operates as follows:

Like many countries with a VAT system, Germany requires businesses to be registered for VAT purposes. In MTIC fraud, the so-called "missing trader" is the initial domestic purchaser in the delivery chain, but often is a sham, non-existent company without any real business activity, set up solely for the purpose of VAT fraud. (RFE 4). Or, the missing trader might be an actual company, but nonetheless is one that does not comply with its obligations to declare and pay VAT to the tax office. (Id.). Essentially, the missing trader purchases intra-Community supplies and charges VAT when the goods are re-sold down the supply chain, but then disappears without making the required VAT payment to the government. The government says that because missing traders do not declare or pay VAT as they should, they tend to be conspicuous, and are normally withdrawn from the market after a short period and replaced with other sham companies. (RFE 5).

"Carousel" fraud refers to a scheme in which a missing trader purports to "sell" goods downstream through a supply chain comprised of pre-determined and fixed "buyers," known as "buffer" companies. (RFE 4). Based on information from Germany's tax investigation offices, the government says that it is already known from the outset when goods are delivered from one country to another, that the goods will be moved from a missing trader to a buffer who acts as the purchaser. (RFE 4-5). According to the government, no legal transactions or sales to end consumers are ever contemplated under this scheme. (RFE 6). Instead, the goods purportedly are "sold" down the chain from a missing trader to buffers through bogus transactions. The missing trader is obliged to report its sales and to pay taxes through periodic VAT returns and annual tax returns; but, it does not do so, resulting in a loss in the amount of the undeclared taxes. (RFE 5). Because the missing trader does not declare or pay VAT, the government says that the missing trader is able to resell goods with only a small mark-up, resulting in a considerable market advantage, i.e., it is able to sell the goods at lower prices than those charged by tax-paying competitors. (Id.).

The missing trader's function, according to the RFE, is to issue invoices purporting to show sales transactions, thereby giving the downstream buffers the opportunity to claim unwarranted deductions of input VAT based on the fake invoices. (RFE 5). In other words, says the government, those fake purchase invoices are essentially a "check for cash" with respect to the Tax Office. (Id.). According to the RFE, buffer companies further down the chain ostensibly fulfill their tax duties and submit tax returns; however, the VAT payable is offset by the bogus input tax from the fake purchase invoices issued by missing traders. (RFE 5-6). The government says that buffer companies' VAT returns often show that, after joining the fraud carousel, taxable sales and input-tax amounts increase by large amounts, but the amount of VAT payable is small. (RFE 6).

According to the RFE, often several buffer companies are used in the fraud carousel in order to conceal the delivery paths and carousel structure. Thus, buffer companies who "purchase" goods from a missing trader, in turn, "sell" the goods to other buffer companies, who then pass the goods to still other buffers. The buffers, says the government, usually are rewarded for their participation in the chain with the profit mark-up when invoicing the goods to the next buffer. (RFE 6). And, because of the pre-defined delivery structures in a chain, buffers are able to engage in profitable transactions at regular intervals, without risk, effort, or business initiative and without any real market or need for the subject goods. (Id.). But, if there is an actual market for the goods, the government says that buffers still benefit from the fraud by the ability to sell the goods at lower prices than those charged by tax-paying competitors. (RFE 6).

The government says that the goods eventually pass from buffers to a so-called "distributor," who ensures that the goods re-enter the same fraudulent supply chain, usually through a VAT-exempt sale to a gang member in another EU country. (RFE 6). Thus, this type of fraud operates on a so-called "carousel," because the same "goods" may be moved round and round again through the supply chain. (RFE 6). According to prosecutor Brorhilker, the law does not permit tax refunds (i.e., deductions of input tax) for sales of such consecutively linked delivery chains established for the purpose of VAT fraud because such sales are not classified economic activity or services within the meaning of the VAT Act. (RFE 7). According to the RFE, fraud carousels result in high VAT damages and are particularly prevalent with respect to computer processors, cell phones, play stations, copper cathodes, gold, automobiles, and emission allowance certificates. (RFE 3-4).

The government says that, early on, when perpetrators first began engaging in carousel fraud, the goods allegedly traded did not actually exist and the purported movement of goods was contrived. (RFE 7). After investigators made that discovery, the government says that perpetrators began trading in actual existing goods; but, the goods are taken to certain freight forwarders "on hold" and are stored there while the goods repeatedly change hands, within a short period of time, through the fraudulent supply chain; or, the goods are stored with specific freight forwarders, or transferred (or seemingly transferred) between them. (RFE 5, 7).

Additionally, the government says that when tax authorities began to look at whether the same goods passed through the delivery chains several times, perpetrators established databases to track whether a product (e.g., a cell phone with a registration number (IMEI number)) had already been sold to a particular buffer in the chain. If so, then steps were taken to ensure that the cell phone was sold to a different buffer. The net result, says the government, is that the perpetrators managed to avoid the chain previously used for the fraud, but were required to pass more goods through the system. Thus, according to the government, in a fraud carousel, all goods are imported, even if it makes no business sense. For example, perpetrators will import goods with 3-pin plugs — usable in Germany only with special adapters — making the goods almost unsellable in Germany. The government says that this practice suggests that such goods are imported from the outset solely for the purpose of evading VAT in Germany and then later re-exporting the goods out of the country. (RFE 7).

4. VAT fraud re trade in emission rights

According to the RFE, since May 2009, VAT fraud in connection with the trade of emission allowances for greenhouse gases has been on the rise. (RFE 8). The government says that the trade in emission allowances stems from the EU's efforts to achieve the climate protection goal of the Kyoto-Protocol, through which the EU and other countries work to achieve lasting reductions in their combined emissions of the six most important greenhouse gases, including carbon dioxide (CO2). (RFE 8). Germany says that, based upon an EU directive establishing a system for the trade in greenhouse gas emissions within the EU, it enacted a law that requires companies with huge greenhouse gas emissions to participate in the emission allowances trade system. Essentially, plant operators are assigned emission allowances representing the reduction targeted within a defined period by official agencies. One emission allowance permits one metric ton of greenhouse gases to be emitted. (FRE 9).

According to the RFE: The national emissions registry in each EU member state is responsible for allocating and managing emission rights, e.g., in Germany, the German Emission Trading Registry. Each registry maintains electronic emission trading accounts for every natural or legal person who, after review of documents required to be submitted, is admitted to the emission allowances trade. Each account shows the rights held to emission allowances. Each emission allowance is unique and is assigned a national origin code and a serial number, which is easily recognized by all trading parties. (RFE 9).

Additionally, the government says that the national emission registries of EU member states are linked via the Community Independent Transaction Log (CITL) in Brussels, as well as by the International Transaction Log (ITL) in the Climate Change Secretariat of the United Nations. (RFE 9-10). The CITL monitors and reconciles the emission trading accounts throughout Europe, and the ITL does the same for accounts worldwide. (RFE 10).

But, according to the RFE, emission allowances may be traded in a variety of ways; and, actual trading is organized, not by the state, but rather, by the parties to the trade:

(RFE 9-10).

The government says that the OTC trade in emission allowances is frequently exploited by perpetrators of carousel fraud. (RFE 10). According to the RFE, in the second half of 2009, information gathered by the Federal Criminal Police Office indicated that a number of persons and companies were working together with a group of perpetrators (comprised of mostly British citizens of Indian or Pakistani origin) to establish constantly changing VAT chains throughout Germany in order to continue evading VAT throughout all of Europe. (RFE 10). The RFE says this was the subject of various press reports in Germany; and, there were also indicators that perpetrators were using the VAT procured through such fraud, not only for personal enrichment, but also to finance terrorism. (FRE 11).

Thereafter, the government says that a large number of companies became active and entered the emission allowances trade in various regions in Germany, including the Rhine-Main territory, and the greater regions of Hamburg, Cologne/Düsseldorf, Berlin, and Munich. (FRE 11). These companies, according to the RFE, share certain common characteristics:

(RFE 11-12).

Against this backdrop, the court now turns to the government's investigation and charges against Azizi. As discussed, he is alleged to have engaged in numerous counts of tax evasion, acting jointly with accomplices and gang members, through gang-based missing trader/carousel fraud. Germany has submitted its evidence through the sworn affidavit of prosecutor Brorhilker, which comprises 113 pages of detailed summaries of witness statements (including statements Azizi himself provided to investigating authorities), and of documents seized during searches of the pertinent residential and business premises, as well as of other information obtained in the government's investigation thus far.

5. Alleged offenses re WOC GmbH (Counts 1-8)

According to the government, Azizi founded and operated WOC GmbH (WOC) in the cell phone business. Although Hosai Azizi was the company's official managing director, the authorities say that, based on their investigation, Samir Azizi actually operated WOC as the company's de facto managing director and used WOC in a VAT fraud carousel.

The government says that Azizi's control over WOC is supported by statements Hosai Azizi made to authorities. According to Brorhilker, during a September 15, 2010 interrogation, Hosai, who was separately prosecuted,15 said that Samir Azizi asked her in 2007 if she would set up WOC for him because he was still a minor at that time. According to Hosai, Samir Azizi prepared all of the necessary documents, including contracts required to establish the company; and, thereafter Samir always prepared documents Hosai was supposed to sign. Hosai says that she herself was seldom on WOC's premises because she was already working part-time for another store in Siegen. (RFE 13-14).

The government says that Samir Azizi's control over WOC is also confirmed through a statement he himself provided to authorities on September 8, 2010. According to the RFE, Azizi told investigators that he began in the cell phone trade in 2006. Only 16 years old at that time, Azizi said he asked his sister Helai Azizi and his sister Hosai, to register cell phone businesses for him, with Helai being asked to found AT Azizi Telekom and Hosai being asked to found WOC. Although his sisters were the official managing directors, Azizi told them that this was a mere formality; and, his sisters were not to intervene in the companies' ongoing business transactions, which were to be performed by him alone. Azizi further stated that he involved his sisters only when absolutely necessary in dealings with banks and authorities. Whenever his sisters did take on more responsibilities in a specific case, it was always on his instructions. And, he assumed full responsibility for the resulting VAT debts. (RFE 14, 17, 24). As for his activities with respect to WOC, Azizi explained: "I then founded WOC GmbH. I wanted to make a new start and do normal business. . . . I wanted to stay clean with WOC, and bought equipment and sold it on EBay. But, that didn't work very well. So I had to take the normal way again, because VAT defrauding companies offer the equipment much cheaper. People all over the world know that if you want to sell cell phones in Germany, they must have passed through Germany already, i.e. originate from a fraud, otherwise you can't do it, otherwise you can't make a profit." (RFE 17).

Additionally, the government says that seized documents do not show any actual business activity conducted by Hosai, but rather, demonstrate that the business was being run by Samir Azizi. Specifically, the government says that the documents show that he:

(FRE 20). According to Brorhilker, under German caselaw, "a person who has taken over de factor management with the consent of the shareholders without formal appointment, who actually performs it and holds a commanding position towards the official managing director or at least has significant dominance, must be recognizable as managing director, i.e., when all dispositions internally and in relations with third parties emanate largely from the de facto managing director and if he exercises a decisive influence on all business matters otherwise." (RFE 20-21). The government claims that Samir Azizi was required to file annual VAT returns and periodic VAT returns with the relevant tax office under Sections 34, 35, 149, and 150 of the German Fiscal Code in conjunction with Section 18 of the VAT Act. (RFE 21). Their investigation, says the authorities, reveals that Azizi did not do so and instead concealed sales and, in some instances, illegally deducted input tax based on bogus purchase invoices. (RFE 21).

The government says its investigation revealed that WOC was part of a fraud carousel involving at least two other companies also allegedly controlled by Azizi: AT Azizi Telekom, the cell phone company established with the help of his sister, Helai Azizi; and Narges.com, a company allegedly established by Azizi with the help of Narges Sadat, who allegedly was Azizi's friend and the company's official managing director.

In a statement given to authorities, Azizi said that, through AT Azizi Telekom, he purchased phones in Luxembourg and the Netherlands and physically transferred them to WOC before WOC had a VAT identification number. (RFE 18). The government says that accounting documents confiscated from WOC include purchase invoices from AT Azizi Telekom. But, according to the government's investigation, AT Azizi Telekom is a sham company controlled by Samir Azizi and involved in VAT fraud chain as WOC's supplier:

(RFE 24-25).

Narges.com reportedly also sold cell phones to WOC, but the government says that, according to a February 2008 VAT audit conducted by the Wiesbaden Tax Office, Narges.com had no actual business operations.16 (RFE 21). And, during a September 23, 2008 search of Narges.com's business premises, investigators discovered that the listed address was in an apartment in a purely residential neighborhood; there was no indication of any commercial business activity in the building or in the apartment of the alleged proprietor, Narges Sadat; and no business documents were found, other than documents concerning Narges.com's trade registration and some letters from the Wiesbaden Tax Office about the company's new registration. Specifically, the government says that no correspondence or invoices were found; no deliveries from the EU territory to the company were ever reported to the VAT information exchange system; and there were no significant payment transactions in the bank account identified on invoices. (RFE 21-22).

The government further claims that their investigation (which included inspection of the programs and data stored on WOC's computers) revealed that the transactions between Narges.com and WOC were bogus and that the Narges.com invoices were drafted on and stored on WOC's computers; the software used to prepare the invoices was licensed to Samir Azizi (not Narges.com) and was installed on WOC's computers on February 24, 2007 (nearly a year before Narges.com was registered); and the related delivery notes were prepared and stored in the same way. (RFE 21-23). In other words, the government claims that Azizi was invoicing himself for fake transactions in order to claim unwarranted refunds of input tax based on sham transactions between Narges.com and WOC.

Additionally, the government says that there is evidence linking Sadat (who was separately prosecuted) and Narges.com, to Samir Azizi: Sadat possessed a WOC business card on which Samir Azizi is identified as the managing director. Two calls were made from WOC to Sadat's cell phone on March 11, 2008. According to a notebook kept by Hosai Azizi, Sadat visited the Azizi family on September 4, 2008. And, on July 22, 2009, Hosai Azizi had a copy of a letter from Sadat's tax accountant sent to the Wiesbaden Tax Office on March 3, 2008 for Sadat's tax file. (RFE 22).

According to the government, documents and information gathered by investigators shows that Sadat simply registered Narges.com with the city of Wiesbaden on January 11, 2008, signed the revenue registration questionnaire, and submitted it to the Wiesbaden Tax Office. She was given a tax number, confirming that she was registered with the Wiesbaden II Tax Office for the purpose of income tax, trade tax, and VAT since January 11, 2008. She was also issued a VAT identification number by the Federal Central Tax Office on February 2, 2008. According to the government, Sadat faxed these documents to Samir Azizi as the person responsible for WOC, on February 19, 2008. Two days later, authorities say that Sadat opened a checking account with Deutsche Bank Privat-und Geschäftskunden AG, and notified Azizi of the account number and her tax number, so that he could include those details in invoices he himself wrote in the name of Narges.com. (RFE 23).

According to the RFE, there were two other entities who reportedly transacted business with WOC: Fonversand and Telesonic. In a statement to the authorities, Azizi described them as follows: "The situation with private individuals was done this way: lots of young people in Frankfurt, schoolchildren, students, etc., had to buy one or two prepaid cell phones from different consumer-electronics stores, e.g., Saturn, Media Markt. The person who was controlling the whole operation then sold larger quantities of these cell phones in an invoice to the companies in Frankfurt, i.e., always around 100-200 units. And that was how the chain began. The young persons were then already part of his gang. The companies in Frankfurt had the receipts of the young persons from the electronics stores. I could have had them too. But, I didn't want to, as it did make no sense to me. The whole thing was probably already a subsidy fraud. I then bought from these companies in Frankfurt. They did not write me any invoices either; the deals were all done in cash. Since I never filed any VAT returns for WOC, tax investigators came at the end of 2007 or beginning of 2008." (RFE 173-174). Azizi further stated that, after three managers from Fonversand and Telesonic showed up one day, threatened Hosai, and demanded money, "I really did operate illegally. This meant that I was forced to start borrowing money from the State. That meant purchasing in Luxembourg and Holland. Then selling the goods in Germany and not declaring the VAT." (RFE 18).

The government charges Azizi with 2 counts of failing to declare sales (i.e., failing to file tax returns, called "non-submission" in the RFE) and 6 counts of claiming unwarranted refunds of input tax, resulting in total damages of €1,238,661.00 as follows:

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 1-8.

6. Alleged offenses re Ferrograph GmbH (Counts 9-10)

Counts 9 and 10 charge Azizi with non-submission of tax returns resulting in fiscal loss of €199,424.00 with respect to Ferrograph GmbH (Ferrograph) as follows:

(RFE 28-29). According to the RFE, in a statement submitted to the authorities via his attorney, Azizi admitted these charges. (RFE 28).

The government says that its investigation revealed the following: Ferrograph was a shelf company formed on December 8, 1997 and purchased by Azizi on June 5, 2009. Ferrograph was founded by a notarized contract, with Mohammad Rhabaran and Ulrich Meves, a solicitor, serving as its shareholders. The company's registered purpose was trading ferroalloys and all kinds of raw materials, but had been inactive since 2003. After the corporate shell was purchased by Azizi in 2009, the company began in the cell phone trade; its registered purpose, however, remained unchanged. The government says that additional suspicion of VAT evasion offenses was raised when Ferrograph, which had been inactive for over a decade, transacted more than €3 million in the two months after Azizi acquired the company, despite strong price competition in the cell phone market. (RFE 27).

In the course of its investigation, the government says that it found no one who acted for Ferrograph or who was involved in the company's operations. Instead, authorities found only employees or interns who were given simple clerical tasks, such as answering phones and filing or forwarding invoices. One Miguel Angel Miranda Pina (reportedly, a resident of Hayward, California) was Ferrograph's formal manager, but was not found in Germany. Based on email evidence, the government says that email contacts for Ferrograph identified only as "Howard Dean" and "Sunjay Gupta" were forwarded by the American forwarding service "deref" to the Yahoo address "samir.azizi@wocgmbh." (RFE 27-28).

According to Brorhilker, at a hearing, solicitor Meves stated that he founded Ferrograph, which remained inactive for a long time afterward. Then, in May or June 2009, he received a phone call from someone in the United States (possibly Pina) who said that he was looking for a "living company." Meves offered Ferrograph for sale; and, according to Meves, Azizi came to his office several days later, claiming that he represented Pina. Meves says he negotiated with Azizi for the sale of the company, the sales contract was notarized on September 5, 2009, and Azizi paid the sales price in cash. It was then that Meves says he believed Azizi had used Pina as an excuse; but, Meves stated that he did not care since he had intended to get rid of Ferrograph anyway. (RFE 28).

The government says that, according to its investigation, Ferrograph was the "missing trader" in a VAT fraud carousel that re-sold cell phones to downstream buffer companies for less than cost. The subject phones, according to the RFE, were exclusively bought in other EU countries and then imported into Germany and sold to German "customers." According to investigators, these "customers" included Wega Mobile GmbH,17 Fonversand GmbH,18 Thaysen Telecom GmbH & Co. KG,19 IT2U GmbH, and Trianel GmbH. The authorities say that they are separately investigating every person responsible for these companies for suspected VAT evasion offenses. (RFE 27). The government claims that Azizi, acting as Ferrograph's de facto manager, issued invoices showing separate VAT amounts and was obliged to file both annual and periodic VAT returns to the Cologne Tax Office, but failed to do so. (RFE 28-29).

Additionally, the government says that it has evidence suggesting that Ferrograph might also be involved in VAT fraud concerning emission allowances. During a search of an office service company that reportedly worked for Ferrograph, authorities found an identification card for one Imran Patel, who is being separately prosecuted and was found to be the person responsible for I.I. First Euro Trading GmbH, an alleged missing trader.20 Moreover, Ferrograph is registered in the German Emissions Trading Registry, with Patel registered as second attorney. (RFE 29).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 9-10.

7. Alleged offenses re Wega Mobile GmbH (Counts 11-20)

Based in part on information obtained during the investigation of WOC, authorities say they began to suspect that Azizi also controlled Wega Mobile GmbH (Wega Mobile) and integrated the company in a VAT fraud carousel. According to the government, Azizi ran Wega Mobile as de facto managing director, together with Mehmet Tunc (separately prosecuted) who was the official manager. Azizi allegedly integrated Wega Mobile as a buffer company in a VAT fraud carousel and then claimed unwarranted refunds of input tax based on purchase invoices from alleged suppliers, knowing that the invoices were not based on any actual supplies or services, resulting in fiscal damages of €2,955,858.00.21 The dates of the alleged offenses and the subject amounts are as follows:

According to the government: Wega Mobile, with its registered office in Solingren, was registered in the commercial register on November 21, 2008. Tunc and Fariah Maqdoor (Azizi's cousin and fiancee) were shareholders who each owned 50% of the company. Maqdoor was also a "trustee" of WOC. Azizi's sister, Helai, was an employee. (RFE 30).

The authorities obtained court orders for the search of homes and business premises. According to the RFE, based on accounting documents, authorities determined that Wega Mobile purchased cell phones from known "missing traders" and then immediately resold them for less than the purchase price. For example, the government says that accounting documents show that Wega Mobile (1) purchased Apple 3GS 16 GB phones from a company called Carex in France on August 18, 2009 for €655.00 and then resold the phones on August 19, 2009 for €618.00 and (2) purchased Apple 3GS 32 GB from Carex in France for €755.00 and resold them the next day for €710.00 (RFE 30).

Additionally, the government says that confiscated forwarding agent files show that Wega Mobile participated in an intra-EU carousel in which it purchased, sold, exported, and repurchased the same phones — and, in some instances, purchased and resold the phones before its supplier had even acquired them. For example, forwarding agent folder 006763/2009, according to the RFE, reveals the following VAT fraud chain in which Ferrograph22 functioned as a missing trader that sold cell phones, at less than cost, to Wega Mobile, a buffer: On July 8, 2009, a company called Prizeflex UK sold Nokia E71 phones to Ferrograph with a unit price of €230.00. That same day, Ferrograph, acting as the missing trader, sold the phones to Wega Mobile at a price of €192.00, i.e., less than cost. That same day, the phones were re-sold to a company called Celltech, HK at a price of €200. (RFE 30-31). The government says the same file also reveals the following chain: On July 8, 2009, Prizeflex UK sold Nokia E51 phones to Ferrograph at a price of €137.00. That same day, Ferrograph sold the phones at a price of €120.00 (again, below cost) to Wega Mobile. That same day, the phones were resold to Celltech HK at a price of €123.00. (RFE 31).

The government claims that documents show that WOC was another "missing trader" that sold phones (below cost) to Wega Mobile, which functioned as a buffer. According to the authorities, on February 2, 2009, a company called Aircall, UK sold Nokia 6600 cell phones to WOC at a price of €175.00. And, that same day, WOC re-sold the phones to Wega Mobile at a price of €160.00. (RFE 31).

Confiscated forwarding agent files and release records, says the government, further demonstrate that these were fraudulent supply chains. According to the RFE, records show that goods are purportedly released by one company to others in the chain, when the goods never actually left the storage of the forwarding agent. For example, the government says that forwarding agent file no. 006861/2009 shows that on July 15, 2009, Ferrograph declared the release of goods to Wega Mobile, which in turn declared the release of the goods to Prizeflex on July 16, 2009. The goods were then declared released to Ferrograph that same day, even though the government says that the goods never left the storage of the forwarding agent, RTR. (RFE 31-32).

According to the government, yet another confiscated forwarding agent file, no. RTR 005989/2009, shows that a company called Dekor GmbH, the first company in the delivery chain, released cell phones to Venus GmbH on April 16, 2009; Venus GmbH then released the goods to Wega Mobile, which reportedly released the goods to H-O-T Phone GmbH on April 17, 2009. However, the government says that records show that Dekor GmbH first received the goods from the supplier G10, UK on April 17, 2009, i.e., the day after Dekor supposedly released the goods to Venus GmbH. (RFE 32).

Based on emails and chat protocols, the authorities say that, although Tunc was Wega Mobile's official manager, Azizi was the one who actually ran the company as its de facto managing director. According to the RFE, MSN chat protocols show that when customers asked for an email contact, Helai Azizi specified "samir@wegamobile.com" and "samir.azizi@wocgmbh.com." (RFE 32). Additionally, Samir Azizi and Maqdoor are identified as the addressees in the "Statement of Account." (Id.).

Brorhilker says that Helai Azizi told authorities that she always acted on Samir Azizi's instructions: At his request, she previously helped him register the business AT Azizi Telekom; and, later, she worked for Wega Mobile, again at his request. According to Helai, Samir always gave her the names of suppliers and customers with whom she should establish contact. She further stated that Samir frequently was abroad; and, whenever he was away, she never knew at what price she was to purchase or sell goods. Helai told authorities she was annoyed by Samir's decision to make Maqdoor a shareholder; but it was what Samir wanted and Samir had always been a "father" figure to her. (RFE 33).

The government says that Helai's statements are corroborated by statements Azizi gave to investigators: "At my request, Helai worked at Wega Mobile as a `maid of all work.' She always did exactly what I told her to do." (RFE 36).

Azizi's control over Wega Mobile is further corroborated, says the government, by statements Tunc made during interrogation and in statements given to authorities. According to the RFE, Tunc said the following:

(RFE 32-33, 37-39).

The government says that emails and chat protocols show that Azizi established business contacts, set prices, and released goods. In chats, the government says that Azizi is referred to as "boss." Moreover, the government says that conversations and business arrangements were made (1) either through the fixed-line numbers of Wega Mobile and Wegatrade GmbH or through Azizi's cell phone; and (2) through email addresses for WOC, Wega Mobile, and Wegatrade GmbH. (RFE 33).

According to the RFE, in a statement given to authorities, Azizi had this to say about how Wega Mobile was started:

(RFE 34). Further, Azizi stated that Wega Mobile also began to do business with the companies Rapid Link and Apple Solution, which acted as Wega Mobile's suppliers. At that time, according to Azizi's statement, "there was a huge rush of English people on the market. Although the companies were German, their managing directors were British. The entire communication was only made in English." (RFE 34). Azizi stated that he "had doubts, whether they were all so clean," but "thought that it was not my problem, if the suppliers were crooked. Only when the financial investigation police came to Wega Mobile I felt serious doubts." (RFE 35). Azizi goes on to state that he met Rapid Link's and Apple Solutions' representatives at a 2009 Cebit fair, where Azizi said that Wega Mobile "made already enormous turnover. E.g. we purchased there directly from Rapid Link and then resold directly. Everything via laptop. Everything was already processed from there, payments included, everything without goods." (RFE 35).

According to Azizi's statement to investigators, people from I.I. First Euro Trading and Point One were also at the Cebit fair; and, it was there that he also met Adam Hicks, whom Azizi told authorities was a resident of India. Azizi goes on to describe Hicks as follows: "But Hicks was certainly not his real name. Certainly an alias name. Whose Indian's [sic] real name is Hicks? Hicks lives in India still today. They are all very careful. Nobody invites anybody to his home. You only have a cell phone number, an e-mail address and a bogus name." (RFE 35).24

Further, according to the RFE, Azizi told authorities: "Then, in May 2009, the raid was conducted at the company Wega Mobile. Afterwards we no longer purchased from WOC but from the company Wegatrade. But then the business of Wega Mobile plunged. I then also withdrew from there." (RFE 36). Azizi goes on to tell authorities, "As of May nothing worked with me there and I left Germany. I did not dare to come back, because I was afraid of an arrest warrant." (RFE 36).

Additionally, the government says that Azizi also provided investigators with statements explaining how VAT fraud operated in the cell phone field: "Ways of the VAT fraud carousel concerning cell phones: Producer of the goods → EU company 1 → GER company 1 → GER company 2 → GER company 3 → Thaysen Telekom → EU company 2 → GER company 4 → GER company 5 → GER company 6 → Exporter." (RFE 36). According to the RFE, Azizi detailed how goods moved through this chain, with "[t]he man pulling the strings ensur[ing] that the monetary flows remained incomprehensible to `third parties.'" (RFE 36). Additionally, according to the RFE, Azizi told authorities that payments were made through platforms such as Global Reach, Swefin, and Swebline and "[e]very company participating in the fraud received a so-called Payment Batch Report for each payment from the corresponding platform or from the bank, where the platform account was held." (RFE 37). Further, Azizi stated: "All amounts transferred in [U.S. dollars] were sharings out of the loot and the amounts transferred in [British pounds] or [euros] were amounts that flow back into the fraud chain." (RFE 37).

The government claims that this evidence indicates that Azizi ran Wega Mobile as de facto managing director and integrated the company as a buffer in a VAT fraud carousel. According to the RFE, purchase invoices found at Wega Mobile show the following unwarranted refunds of input tax based on bogus transactions with a number of fraudulent companies:

(RFE 40-45).25

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 11-20.

8. Alleged offenses re iTrading GmbH & Co. KG (Counts 21-26)

The government alleges that, together with his cousins (Habib, Hamid, and Hamed Soori), Azizi operated several companies as de facto managing director and claimed unwarranted refunds of input VAT based on purchase invoices of alleged suppliers, knowing that the invoices were not based on actual deliveries or services. With respect to iTrading GmbH (iTrading), Azizi is said to have integrated the company in VAT fraud chain. He is charged with 6 counts of claiming unwarranted refunds of input VAT, for total claimed fiscal damages of €10,909,022.00. The dates of the alleged offenses and the subject amounts are as follows:

(RFE 62).

According to the government, iTrading was integrated into a VAT fraud chain as a buffer company involved in the sale of emission allowances (CO2 permits) to a company known as Lösungen 360. Lösungen 360 then allegedly re-sold the permits to Deutsche Bank in Frankfurt, which then transferred the certificates to Deutsche Bank in London in a fraud carousel that led back to Germany. According to the RFE, the alleged fraud was uncovered as follows:

Based upon a VAT audit conducted by the Düsseldorf Center Tax Office, the government says that between October and November 2009, Azizi's cousin, Habib Ahmad Soori (at Azizi's direction), tried to establish iTrading in the emissions trading market and to obtain a tax identification number. According to the VAT auditors, the tax office declined to issue a tax identification number at that time because Soori did not demonstrate any particular knowledge of the emission allowance trade, did not have a clear business concept, and could not make any statements about financing. Soori reportedly told finance officers that he planned to hire someone who could satisfy the business requirements and that he intended to begin trading in emissions allowances only when he found a suitable employee. The government says that the VAT audit, however, revealed that iTrading was already conducting business in the emission allowances trade. Specifically, authorities say that the company received an October 23, 2009 invoice from Sabs Euro Trading GmbH (Sabs Euro Trading) for iTrading's alleged purchase of 21,000 emission allowances for €332,117.10, as well as an October 23, 2009 invoice for the alleged purchase of 25,000 allowances for €404,005.00. According to the RFE, Sabs Euro Trading is a company known for VAT fraud in the cell phone business. The government says that the invoices were suspicious because the date of re-invoicing of both margins was earlier than the date service was provided. (RFE 46-47).

According to the government, other invoices revealed further irregularities in iTrading's business activities. iTrading reportedly issued invoices on October 15 and 16, 2009 to a company called Grünhaus Energie GmbH (Grünhaus Energie). But, in a search of Grünhaus Energie's premises, authorities say those invoices were not found. Moreover, the government says Grünhaus Energie's address was the same address of several other companies, including I.I. First Euro Trading (discussed above), Evatrading GmbH, and Vektor-Energie GmbH. (RFE 47). Other invoices, says the government, show that the invoice dates did not match the transaction dates recorded in the CO2 Emissions Trading Registry; and, although the invoices indicated that the number of transferred CO2 allowances matched traded volumes, the registry showed that the number of invoices issued was inconsistent with the number of transactions made. (RFE 47-48).

The government says its investigation revealed that iTrading eventually obtained a tax identification number when Habib Soori presented Raik Heinzelmann as iTrading's employee. The government claims that Heinzelmann did not actually work for iTrading, but was instead in charge of a different company, Advatag AG, which began collaborating with iTrading in April 2010. Authorities say that iTrading then experienced a huge increase in sales revenues — a strong indication to German tax offices that iTrading was part of a VAT fraud chain. (RFE 48).

Further indication of fraud, says the government, was iTrading's dealings with the company Lösungen 360, which was managed by one Irfan Patel.26 The government alleges that, in December 2009, Lösungen 360 began purchasing emission allowances from iTrading and, in turn, passed the allowances on to Deutsche Bank in Frankfurt. According to the statement given by Heinzelmann, who was separately prosecuted, Patel was acquainted with the Soori family. In addition to Habib Soori, Heinzelmann said he knew another brother in the Soori family named Hamed. According to the RFE, Heinzelmann told authorities that Hamed supervised the businesses and money transactions; and, Heinzelmann identified Samir Azizi in photographs as "Hamed." (RFE 48-49).

According to the RFE, in statements made to authorities, Habib, Hamid, and Hamed Soori, as well as Selaiman and Helai Azizi, all said that Samir Azizi often assumed the role of Habib or Hamed Soori when dealing with third parties. (RFE 49).

Additionally, based on confiscated chat protocols and Heinzelmann's statement to investigators, the government says that both Samir Azizi and Habib Soori knew that Lösungen 360 subsequently delivered emission allowances to Deutsche Bank. As discussed above, Germany says that it enacted a law requiring companies with huge greenhouse gas emissions to participate in the emission allowances trade. The government claims that this is evidence of an artificial delivery chain implemented for no other purpose than VAT fraud — one with predetermined partners and which makes no business sense. (RFE 49).

Another indicator of VAT fraud, says the government, is the speed with which emission allowances are traded through the delivery chain. For example, in the course of their investigation, authorities say they determined that one emission allowance was channeled 5 times in 11 minutes through different CO2 Emissions Trading Registry accounts, whereas a single transaction ordinarily takes at least 2 minutes. (RFE 49). According to the RFE, the speed with which transactions occur might lead one to conclude that there is little time to consider how a profit can be made. But, the government claims that profits are basically guaranteed by the VAT evasion and the pre-determined "purchasers," making it possible to sell allowances below the daily stock market price. (RFE 49). For this reason, the government says that missing traders often sell millions of allowances without any advance payment. (Id.).

During his interrogation, the government says that Heinzelmann produced a data file of allowances that were moved through the chain. According to the RFE, based on that file, authorities determined that the same allowances were traded up to 18 times through the chain and then "turned round" several times through Germany, England, Dubai, and other countries. (RFE 50). Moreover, the government says that payments were often processed through the same payment platform, and the subject companies allegedly kept a bank account into which all funds flowed, differentiated only by corresponding sub-accounts. (RFE 50). Through several searches of iTrading's business premises, authorities say they confiscated a large volume of documents, including data from computers, chat protocols, email accounts, cell phones, Blackberries, and other personal digital assistant devices. Authorities also intercepted communications. According to the government, evaluation of this data revealed the following:

(RFE 50-51).

Brorhilker avers that, in a statement given to authorities, Azizi said:

Additionally, the government says that Azizi provided authorities with details about his efforts to establish suppliers for the delivery chain, including Hamster-Ecke and Sabs Euro Trading. According to the RFE, Azizi told authorities that his brother Selaiman mentioned Hamster-Ecke, and Hicks suggested Sabs Euro Trading as a supplier. (RFE 53). When Azizi tried to obtain an emission trade register account, he says Hicks put him in contact with Grünhaus-Energie and thereafter, Azizi says "everything went automatically":

(RFE 53). According to the RFE, Azizi said that when purchases were made from suppliers, "First we paid the money to their normal account and then to Global Reach in London."27 (RFE 53).

The government says that, in that same statement to authorities, Azizi told them about iTrading's integration into the VAT fraud chain as follows: He returned to Germany in December 2009 for the first time — landing first in Amsterdam "[a]s a precaution," and then driving into Germany to iCell/iTrading, where he named himself "Kevin." (RFE 53). Shortly after, Azizi met again with Hicks in Dubai and "spoke[] very frankly about VAT fraud." (RFE 54). The two discussed that "iTrading should really be integrated as a buffer" because the company was "nearly bankrupt," and Azizi told authorities, "I then joined in." (RFE 54-55).

According to the RFE, in his statement to authorities, Azizi provided details about how emission allowances moved through the VAT carousel from Germany to England and then back to Germany and about how payments were made:

Additionally, in a statement given to investigators, Azizi explained how payments generally were made in a VAT fraud chain and pointed to iTrading as an example:

(RFE 37).

According to the German government, on December 11, 2011, the Frankfurt Regional Court sentenced several perpetrators mentioned by Azizi to prison for VAT evasion in connection with the emission allowances trade. And, the Frankfurt Attorney General's Office is investigating the involved employees of Deutsche Bank. (RFE 56). Further, the government notes that, in Case No. 5 V 3555/10 A (H(U)), the Düsseldorf Finance Court concluded that the claimed deductions of input tax were unwarranted since the alleged suppliers in the delivery chain (i.e., I.I. First Euro Trading GmbH, Everstar Handels GmbH, and Sabs Euro Trading GmbH) had no real address. The government claims that this is in line with case law of the European Court of Justice and of the Federal Fiscal Court, holding that "a bogus establishment in a form that is characteristic of a so-called letter box entity or a dummy company is not assessed as being a registered office of a business activity." (RFE 57).

Further, the government says that in a statement given to authorities, Habib Soori said that:

(RFE 57-58). According to the RFE, Soori told investigators that he initially believed the money legitimately was made from one of Azizi's businesses. But later, on a flight to the United States, Soori said he asked Azizi about everything, and Azizi told him that they had gotten into a fraud chain. (RFE 58).

The government says that Helai Azizi also gave a statement to authorities confirming that Samir often pretended to be "Kevin Ahmadi," something she said she assumed he did because of the name Azizi. And, in connection with another business, AS Handels GmbH,28 Helai said she answered the phone identifying herself, not as Azizi, but as "Celina." (RFE 58).

The government says that in a statement given to authorities, Hamed Soori said:

(RFE 58-59).

Based on this evidence, the government claims that Azizi, acting as de facto managing director, operated iTrading as a buffer in a VAT fraud chain in the cell phone and emission allowances trades, and claimed unwarranted refunds of input VAT based on purchase invoices from alleged suppliers, even though he knew that the invoices were not for actual deliveries or services. The government says that invoices found at iTrading show the following amounts of input tax based on bogus transactions with a number of fraudulent companies:

(RFE 59-62).30

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged tax evasion/fraud offenses charged in counts 21-26.

9. Alleged offenses re iCell GmbH & Co. KG (Counts 27-41)

iCell GmbH & Co. KG (iCell) is one of the group of companies that the government says Azizi operated as de facto managing director, together with his Soori cousins. Azizi is charged with 15 counts of claiming unwarranted refunds of input VAT to German tax authorities in connection with iCell, an alleged buffer company, resulting in fiscal loss of €12,573,141.00.31 The dates of the alleged offenses and the subject amounts are as follows:

(RFE 67-68). Based on confiscated documents, the authorities say they discovered an artificial supply chain, linking a fictitious intra-Community supply that went to missing traders controlled by Azizi, then to several buffers (also controlled by Azizi), then to a distributor that exported the bogus goods. The government says that, among other things, the confiscated documents reveal the following invoice path (i.e., delivery chain) in which more than one company controlled by Azizi served as "buffers":

(RFE 64-65). There are a number of indicators, says the government, demonstrating that this is an artificial delivery chain controlled by Azizi:

First, the government says that Azizi's brother, Selaiman Azizi, as well as one Yusuf Güles (who has also been charged),33 identified I.I. First Euro Trading and Sabs Euro Trading as missing traders with only letter box addresses. (RFE 64). (As discussed above, both of these companies are alleged to have been part of VAT fraud chains with other companies run by Azizi.) Additionally, the government says that both Selaiman Azizi and Güles said that Samir Azizi often made payments to Sabs Euro Trading via a "financial platform" account in England with Global Reach Partners. (Id.). (As discussed above, Global Reach Partners is said to have been identified by Azizi in statements to authorities as a payment platform used in VAT fraud chains. See RFE 55-56.)

Second, the government says there is evidence that Azizi controlled more than one company in the chain. As discussed above, Azizi himself told authorities that he founded iCell (RFE 52); and, he also explained how payments generally were made in a VAT fraud chain, noting as an example, that money was paid to the company SVS Securities PLC, even though that company was not a supplier of iTrading or iCell. (RFE 37).

Additionally, the government says that Selaiman Azizi and Güles both told authorities that Samir Azizi was responsible for founding and managing iCell, as well as Nexo Chakfa; that he was the idea contributor; that he made the decisions; that he purchased the goods; and that he determined in advance the products and quantities to be "sold" and who would have direct contact with Techstage. (RFE 63-64). Moreover, the government says that during a September 28, 2011 interrogation, iCell employee Ivan Dikic (who was separately prosecuted) said that Azizi "made the important and final decisions of the companies iCell and iTrading. . . . ." (RFE 63). And, according to the RFE, Andreas Buschmann, another iCell employee, told authorities that Azizi "definitely was the real boss. . . ." (RFE 63).

Further indicating Azizi's control over this chain, says the government, are statements by Selaiman Azizi and Güles that Samir Azizi was the one who was responsible for founding and managing a company called AS Handels GmbH (formerly, AS Cellectric GmbH). (RFE 64). According to their statements, AS Handels GmbH initially invoiced iCell; and later, when Techstage could no longer make "purchases" from iCell, Samir Azizi arranged to have iCell invoice AS Handels GmbH, which in turn, "sold" to Techstage. (Id.). In other words, the government claims that Azizi arranged to have AS Handels GmbH switch places with iCell as a buffer in the alleged VAT fraud chain.

Third, the government claims that Azizi operated under false names to hide his identity. According to the RFE, iCell employees Ivan Dikic and Andreas Buschmann identified Azizi in photos as "Kevin Ahmadi." (RFE 63). Additionally, the government says that Selaiman Azizi and Güles both stated that Samir Azizi presented himself as "Kevin Ahmadi" to third-parties on the phone and in conversations and also pretended to be a "Soori" (the family name of his cousins Habib, Hamid, and Hamed Soori). (Id.). Moreover, the government says that both Selaiman Azizi and Güles stated that Samir Azizi tried to avoid being recognized as "Azizi" and also falsified signatures. (Id.).

The government says that through iCell, Azizi also fraudulently obtained purchase invoices and claimed unwarranted refunds of input tax from the following "upstream" companies in the chain, knowing that the invoices were not based on any actual supplies or services. According to the RFE, invoices found at iCell show the following amounts of input tax based on bogus transactions with a number of fraudulent companies:

(RFE 65-67). The government says that the claimed fiscal losses are also based on amounts found on several smaller invoices, which Brorhilker says are also illegal because "neither the issuer of the invoices nor the recipient of the invoices are undertakings in the meaning of the VAT Act." (RFE 67).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged tax evasion/fraud charged in counts 27-41.

10. Alleged offenses re AS Handels GmbH (Counts 42-45)

The government alleges that AS Handels GmbH (AS Handels) was integrated as a buffer in a VAT fraud chain, moving goods from Sabs Euro Trading GmbH to other companies downstream. Azizi is charged with one count of non-submission of VAT returns and three counts of claiming unwarranted refunds of input tax (misrepresentation), resulting in fiscal damages of €7,270,741.00. The dates of the alleged offenses and the subject amounts are as follows:

The government says that AS Handels was a "shelf" company originally registered on August 20, 2003 as AKMA Export Import GmbH, with its registered business being identified as the production and sale of bags, shoes, carpets, textiles and other goods. (RFE 68). According to the RFE, Hamid Soori told authorities that Helai Azizi approached him and asked him to found a company; and that Samir Azizi later called him and suggested that Hamid take over a founded GmbH and that he (Azizi) would find one, but it had to be in Düsseldorf. (Id.).

The government says that on January 19, 2010, AKMA Export Import GmbH was renamed AS Cellectric GmbH (AS Cellectric), and the managing director, Mohammad Rhabaran,36 was replaced by Hamid Soori. (RFE 68). According to the RFE, Soori stated that Samir Azizi provided a list of customers that they were to buy from and sell to; and, at Azizi's direction, Sabs Euro Trading was AS Cellectric's supplier, and AS Cellectric, in turn, sold to iCell. (RFE 69). The government says Soori's assertions are supported by statements Samir Azizi gave to authorities: "And then Hamid bought the company AS Cellectric GmbH (respectively AS Handels GmbH). As I wanted them to be well supplied, the company iCell bought at AS Cellectric." (Id.).

As discussed above, the government says that Sabs Euro Trading:

Additionally, as discussed above, the government claims that iCell was another company controlled by Azizi and used in VAT fraud chains. (RFE 63-68).

According to the RFE, on May 20, 2010, AS Cellectric was renamed AS Handels GmbH, and the company's registered office was relocated to an address in in Düsseldorf. (RFE 68). Brorhilker says that in a statement given to authorities, Hamid Soori said that, within the first month of business, they had a turnover of €3 million and that he did not initially find that odd since they were selling to iCell. But, Soori says that he had been naïve and did not think about the possible consequences. And, according to the government, Soori stated that he later became suspicious because, even though the company was relatively new, clients came to them quickly and turnover moved quickly. (RFE 69).

Additionally, as discussed above, the government says that Selaiman Azizi and Güles both stated that Samir Azizi was the one who was responsible for founding and managing AS Handels; that he was the idea contributor; that he made the decisions; that he purchased the goods; and that he determined in advance the products and quantities to be "sold." (RFE 64).

Moreover, as discussed above, based on statements by Selaiman Azizi and Güles, the government says that Azizi arranged to have AS Handels GmbH switch places with iCell as a buffer in a VAT fraud chain, such that iCell sold to AS Handels, which in turn passed goods to downstream companies. (RFE 64).

The government claims that Samir Azizi operated AS Cellectric, now AS Handels, as the company's de facto managing director; and, based on purchase invoices at AS Handels, the government further alleges that Azizi wrongfully claimed refunds of input tax, knowing that the invoices were not based on any actual supplies or services, as follows:

(RFE 69-70).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged tax evasion/fraud charged in counts 42-45.

11. Alleged offenses re Nexo Chakfa e.K./Nexo Chakfa GmbH (Counts 46-56)

The government claims that Azizi ran the company Nexo Chakfa e.K./Nexo Chakfa GmbH as de facto managing director, integrated the company as a "buffer" in a VAT fraud chain, made unwarranted claims for refunds of input VAT (misrepresentation) based on invoices (knowing that the invoices were not based on any actual supplies or services), and failed to submit VAT returns for a total fiscal loss of €5,260,446.00. The dates of the alleged offenses and the subject amounts are as follows:

(RFE 77-78).

According to the RFE, Nexo Chakfa e.K./Nexo Chakfa GmbH (Nexo Chakfa) was founded by Selaiman Azizi and Güles in the cell phone trade. The government says that Nexo Chakfa e.K. was registered on August 13, 2009. Then, pursuant to a September 30, 2009 notarial contract, the government says that Selaiman Azizi and Güles founded Firma Nexo Chakfa GmbH, (with a registered office in Siegen) together with one Joel Kabongo Kalambay as an additional shareholder. The RFE goes on to state that Firma Nexo Chakfa GmbH was registered on October 15, 2009; and then, pursuant to an October 29, 2009 contract, Kalambay transferred his shares in equal parts to Selaiman Azizi and Güles. (RFE 71-72).

According to Brorhilker, a November 2009 VAT audit conducted by the Siegen Tax Office established that Nexo Chakfa e.K. did not have a business office, but only rented a flat; the IMEI numbers of the allegedly traded cell phones had not been registered; the phones had never physically been at the company's alleged registered office in Siegen; and the company started with very high turnover from the very first month of business. (RFE 72). According to the RFE, the same was found to be true of Nexo Chakfa GmbH. (Id.).

In a statement to authorities, Samir Azizi said he integrated Nexo Chakfa into a VAT fraud chain in the cell phone trade because Selaiman and Güles urgently needed money and because he "thought another buffer would be good in order to be as far as possible away from the missing trader"; and, according to Brorhilker, Azizi suggested Sabs Euro Trading and I.I. First Euro Trading as "suppliers" and iCell as a "purchaser":

(RFE 74).

Based upon analysis of business documents, the government says that Nexo Chakfa was inserted in an artificial delivery chain between "missing traders" Sabs Euro Trading39 and I.I. First Euro Trading, and that neither one of these "suppliers" made any actual deliveries. According to the RFE, the München Tax Investigation found that Sabs Euro Trading did not have any actual business activities, and the Frankfurt Tax Investigation found the same to be true of I.I. First Euro Trading. (RFE 72-73).

Additionally, the government says that statements given by iCell employees confirm that Nexo Chakfa was purposely integrated into a VAT fraud chain by Azizi. According to the RFE, during his September 28, 2011 interrogation, iCell employee Andreas Buschmann said that Azizi (whom he knew as "Kevin Ahmadi") "said that [iCell] now ran via the company AS Handels GmbH and the company Nexo Chakfa GmbH to the company Techstage of the separately prosecuted Marcel Weidemann. . . . ." (RFE 74). Additionally, the government says that during his September 28, 2011 interrogation, iCell employee Ivan Dikic said that AS Handels GmbH and Nexo Chakfa GmbH had purposely been integrated into the VAT fraud chain. (RFE 75).

Invoices, according to the RFE, also show that Sabs Euro Trading and I.I. First Euro Trading extended significant credit on a scale that would be inconceivable in the ordinary course of business. For example, the government says that between January 22, 2010 and February 28, 2010, Sabs Euro Trading issued invoices for around €2.7 million, but received payments of only €130,000.00. (RFE 73). Similarly, the government says that invoices show that between January 7, 2010 and January 11, 2010, I.I. First Euro Trading made "deliveries" on credit amounting to almost €1.3 million. And, before those "deliveries" were paid for, additional invoices were issued on January 13, 2010 for nearly €4 million. (Id.). By the end of March 2010, the government says that I.I. First Euro Trading extended credits between €3 million and €5.6 million. (Id.). Moreover, the RFE says that business documents show that Nexo Chakfa extended credit to iCell. (RFE 72). And, when payments were made, funds were transferred to I.I. First Euro Trading and Sabs Euro Trading or directly to a Global Reach Partner Ltd.40 account with Lloyds TSB Bank in London. (RFE 72).

Moreover, the government says that the volume of alleged sales is vastly out of proportion to the payments made. According to the RFE, only three payments to suppliers were matched with corresponding invoices; and, the volume of traded cell phones amounted to €456,662.00 — only 3.5% of the total payments made in the amount of €13,354,982.00. Remaining payments, says the government, do not correspond at all to any invoices. (RFE 73).

Thus, based on invoices found at Nexo Chakfa, the government says that claimed refunds of input tax for purchases purportedly made to the following companies were obtained by fraud:

(RFE 75-77). The government says that the claimed fiscal losses are also based on other input tax amounts from various smaller invoices that were similarly obtained by fraud, "as neither the issuer of the invoices nor the recipient of the invoices are undertakings in the meaning of the VAT Act." (RFE 77).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 46-56.

12. Alleged offenses re Hamsterecke.de GmbH/Hamster Mobile GmbH (Counts 57-66)

The government alleges that, in connection with the company Hamsterecke.de GmbH, later renamed Hamster Mobile GmbH, Azizi failed to submit VAT returns and claimed unwarranted refunds of input tax, amounting to a fiscal loss of €6,302,224.00:

(RFE 80-81).44

Brorhilker says that the official managing directors of Hamsterecke.de GmbH, later renamed Hamster Mobile GmbH on January 8, 2010, (hereafter referred to as "Hamster") were Fred Wenzek and Shiraz Jilani, both of whom were prosecuted. (RFE 78). According to the RFE, on July 7, 2010, Hamster's registered office was transferred to Leipzig and Jilani was replaced as managing director by one Richard Mintus, who himself was later replaced by one Andreas Feiherr von Rössing (also being prosecuted) on December 20, 2010. (Id.).

The government claims that although not the official managing director, Azizi is the one who actually controlled the company. According to Brorhilker, confiscated emails and chat protocols show that Azizi established customer contacts, set prices, made payment transactions, and presented himself as the company's managing director to third-parties. (RFE 78). Additionally, the government says that the chat protocols contain conversations between Selaiman and Helai Azizi, in which they say that Samir Azizi controlled the company. Further, Brorhilker says that Selaiman Azizi later stated during a hearing that he believed Samir Azizi was pulling the strings behind Hamster, which had been integrated into a VAT fraud chain. (RFE 78-79).

The government says that documents also show that Sabs Euro Trading and I.I. First Euro Trading were "suppliers" in the chain. (RFE 79). As discussed elsewhere in this order and in the RFE, the government says that these companies were found by tax authorities to be "missing traders," who also participated in other artificial delivery chains run by Azizi.

Additionally, Brorhilker says that documents demonstrate that Azizi drafted Hamster invoices from various other companies in the chain. For example, from at least October 2009, the government says that the design of Hamster invoices match those of Sabs Euro Trading, and purchase invoices and sales invoices both contain the same printing irregularities. According to the RFE, while the letterhead and the sub-line of both companies' invoices are in normal typeface, the remaining print re product design and price are both blurred, suggesting that these entries are added later from another printer and that the same printer is used to make those subsequent entries. (RFE 79). Additionally, the government says that blank Hamster invoices were found at the premises of other companies in the supply chain. For example, authorities say they found blank Hamster invoices stored on computers and laptops confiscated from iCell. As discussed elsewhere in this order and in the RFE, Azizi told authorities that iCell is a company he founded (RFE 52), and the government alleges that iCell is another company that served as a "buffer" in VAT fraud chains controlled by Azizi (RFE 63-68).

Further evidence of fraud, says the government, are discrepancies on invoices with respect to Hamster's name change. According to the RFE: Authorities say they discovered two invoices, both dated December 9, 2009 and bearing the same invoice number (2009100033) — but, one invoice was from Hamsterecke.de GmbH for €132,934.00 and the other was from Hamster Mobile GmbH for a different amount. (RFE 79). Additionally, authorities say they found a Hamster-Ecke.de GmbH invoice for cell phones dated September 15, 2009 in the amount €211,255.00, addressed to iCell at the Soori family's private address. According to the government, iCell was never located at that address and was not founded and registered until October 6, 2009. (RFE 79-80). And, another invoice, says the government, displays Hamsterecke.de GmbH's logo, but bears the name of Hamster Mobile GmbH. (RFE 80).

According to Brorhilker, analysis of Hamsterecke.de GmbH's accounting also reveals that goods were resold at prices that were below cost. (RFE 80).

As such, and based on invoices found at Hamster, the government says that claimed refunds of €1,082,349.00 input tax for purchases allegedly made from Sabs Euro Trading were obtained by fraud. As discussed above, the government says that Sabs Euro Trading was found by the Munich Tax Investigation to be a "missing trader" with bogus registered addresses (RFE 60, 75, 80).

The government says that the claimed fiscal losses are also based on input tax amounts found on smaller invoices from other traders and which are also illegal "as neither the issuer of the invoices nor the recipient of the invoices are operators in the meaning of the VAT Act." (RFE 80). According to the RFE, the claimed fiscal losses are also based upon VAT returns that Azizi allegedly was obliged, but failed, to submit. (RFE 80-81).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 57-66.

13. Alleged offenses re Amaan Enterprise GmbH/Mobiltronics GmbH (Counts 67-82)

The government alleges that Azizi, acting as de facto managing director of Amaan Enterprise GmbH (later renamed Mobiltronics GmbH), wrongfully claimed refunds of input tax based on purchase invoices from alleged suppliers, knowing that the invoices were not based on any actual supplies or services, for a total fiscal loss of €10,308,708.00. The dates of the alleged offenses and the subject amounts are as follows:

(RFE 86-87).45

According to the RFE, the corporate history of the subject company is as follows: Amaan Euro Trading GmbH was founded by Inayat Patel on April 23, 2010, with solicitor Ramminger as the official managing director. Less than two months later, on June 4, 2010,46 the company name was changed to Amaan Enterprise GmbH, and the company's office was relocated to Ramminger's address in Frankfurt. On October 1, 2010, the company relocated its office to another location in Frankfurt. On November 30, 2010, one Nasir Afzal Ahmad was appointed managing director. And, on March 28, 2011, when Amaan Enterprise GmbH (Amaan Enterprise) was registered in the commercial register, the company name was changed to Mobiltronics GmbH (Mobiltronics). (RFE 82).

The government says that there are several red flags about the company that strongly suggest fraud:

According to Brorhilker, emails and chat protocols show that Azizi is the one who established customer contacts, set prices, controlled payment transactions, and presented himself to third-parties as the company's managing director. (RFE 83).

Additionally, the government says that Azizi operated under fake names, including "Patel" or "Patelino." Based on statements from Selaiman Azizi and from former company employees, the government says that the company's official managing directors, Inayat Patel and Nasir Afzal, speak only English. During telephone surveillance, however, the person called "Patelino" speaks impeccable German. According to the RFE, an expert in voice comparison from the Federal Criminal Police Office confirmed that "Patelino"'s voice was that of Samir Azizi. (RFE 83). Moreover, the government says that Azizi is further linked to the company through a friendship with Nasir Afzal, who was separately prosecuted. The RFE includes a photo, reportedly taken during a holiday in Dubai in 2009, showing persons the government identifies as Samir Azizi and Nasir Afzal, together with others identified as Samir Azizi's brother (Said Azizi) and Azizi's cousins (Hamid and Habib Soori). (RFE 83-84). As such, the government contends that Azizi, acting as de facto managing director, wrongfully claimed refunds of input tax based on alleged "purchases" of cell phones and emission allowances from Sabs Euro Trading, Adisony GmbH, and Fashion Textil GmbH.47 According to the RFE, purchase invoices found at the company show input tax in the following amounts:48

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 67-82.

14. Alleged offenses re BAK Enterprise GmbH (Counts 83-85)

According to the RFE: BAK Enterprise UG was founded on April 6, 2009 in Hanau, Germany by one Ajitpal Sekhon, a Canadian citizen, who also was appointed as the company's managing director. The company's registered business purpose was identified as trading and distributing water purification and filtration systems and refuse bin disposal systems, as well as environmental consulting services. Pursuant to a March 15, 2010 notarial contract, the government says that the company was renamed BAK Enterprise GmbH (BAK Enterprise) and its registered office was relocated to an address in Darmstadt belonging to the Merz, Arnold, Wipper law firm, but these changes were not entered in the company's register. (RFE 87).

Based on its investigation, the government claims that "Ajitpal Sekhon" actually was an identity assumed by Azizi in connection with BAK Enterprise; and, because the company did not file tax returns (as alleged by the government), the government claims that BAK Enterprise likely operated as a "missing trader" in intra-Community transactions.

The government says it linked Azizi with BAK Enterprise through statements he gave to authorities and based on a Canadian identity card for "Ajitpal Sekhon" (obtained during searches) bearing Azizi's photograph. (RFE 88). Based on its investigation thus far, the government says it has ascertained that the real Ajitpal Sekhon is a Canadian citizen who does not speak German and who was sentenced in 2005 to ten years imprisonment for drug offenses. (RFE 88). According to the RFE, a new trial will be held in the Canadian criminal proceedings and the judgment is not yet final; but, under the circumstances, the government says it is highly unlikely that Sekhon would have been permitted to travel to Germany in the meantime.49 (RFE 88).

According to the RFE, Azizi's connection to BAK Enterprise is also based on the fact that the company was founded by the law firm Wilke Consulting in Hanau, Germany. (RFE 88). The government says that many fraudulent companies integrated into VAT fraud chains were also founded in Hanau, including Amaan Enterprise — a company that, as discussed elsewhere in this order and the RFE, the government also attributes to Azizi and claims was integrated into VAT fraud chains. (Id.). Additionally, authorities say that the name "Martin Wilke Consulting" was found in Habib Soori's cell phone. (Id.). As discussed above, Habib Soori is alleged to be the official managing director of iCell and iTrading — two companies that, as discussed elsewhere in this order and in the RFE, the government also attributes to Azizi and claims were integrated into VAT fraud chains. (Id.).

A further indicator of fraud, according to the government, is that BAK Enterprise, contrary to its registered business purposes, first operated in the emission allowances trade and then, later, in the cell phone trade. (RFE 88).

As such, the government says that Azizi, acting as BAK Enterprise's de facto managing director, issued invoices for the supply of cell phones, emission allowances, and copper cathodes, but failed to declare the purported "sales" to the tax office for a total fiscal loss of €3,565,554.00. The dates of the alleged offenses and the amounts in question are as follows:

(RFE 89).

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 83-85.

15. Alleged offenses re My iCell GmbH (Counts 86-89)

The government claims that Azizi, acting as de facto managing director of My iCell GmbH (My iCell), wrongfully claimed refunds of input tax based on purchase invoices from alleged suppliers, knowing that the invoices were not based on any actual supplies or services, for a total fiscal loss of €520,589.00. The dates of the alleged offenses and the subject amounts are as follows:

(RFE 92).

According to the RFE, My iCell GmbH (My iCell) was registered in the commercial register of the Neuss Local Court on April 6, 2011 and dealt in the trade and distribution of telecommunication devices, play stations, and consumer electronics, as well as the import and export of petroleum products, recyclable materials, and fruits and vegetables. The company's official managing director was Marian Iancu (RFE 89-90). The government says that various indicators show that it was Azizi who actually controlled

My iCell's business and that the company was integrated into a VAT fraud chain:

As such, the government claims that Azizi was My iCell's de facto managing director and since at least April 2011, he integrated the company as a "buffer" in a VAT fraud chain in iCell's place. The government further claims that Azizi wrongfully claimed refunds of input tax based on purchase invoices from "suppliers," knowing that the invoices were not based on any actual supplies or services. According to the RFE, purchase invoices found at My iCell show the following amounts of input tax based on purported purchases from the following companies:

The evidence before the court is sufficient to establish probable cause to believe that Samir Azizi committed the alleged offenses charged in counts 86-89.

CONCLUSION

The evidence before the court is sufficient to establish probable cause to believe that Azizi committed the 89 counts of tax evasion — i.e., 77 counts of providing tax authorities with incomplete or incorrect statements about tax-relevant facts and 12 counts of failing to inform them about tax-relevant facts, acting contrary to duty — in violation of Section 370, subsection no. 1 and no. 2, subsection 3 sentence 2 no. 1 and no. 5 of the Fiscal Code of Germany in connection with Sections 18 of the Turnover Tax Act of Germany, 22, 23, 25 subsection 2, 53 of the Penal Code of Germany, and Sections 1, 105 ff of the Juvenile Justice Act of Germany.

For the reasons stated above, the request for a certificate of extraditability of Samir Azizi is GRANTED.