Italian financial authorities have raided AC Milan's headquarters on Tuesday morning as part of an investigation into alleged fraudulent activity involving 64 individuals, including many high-level directors, according to reports in Italy.
Casa Milan was searched by members of the Guardia di Finanza with documents and assets seized.
La Gazzetta dello Sport and Corriere dello Sport both report that Milan's general manager Adriano Galliani is one of the suspects, together with Napoli president Aurelio De Laurentiis, Lazio chief Claudio Lotito, former general manager of Juventus Jean Claude Blanc, in addition to former player Hernan Crespo and current player Ezequiel Lavezzi.
The investigation, which goes by the name "Fuorigioco" ("Offside") is examining suspected tax evasion by 35 clubs from Italy's Serie A and Serie B. It is being conducted by the Naples public prosecutor, led by Danilo De Simone, Stefano Capuano and Vincenzo Ranieri.
The raid on Milan's headquarters is reported to be only the first part of the operation.
Italian football hit by tax evasion scandal - https://t.co/xhDVRutX27 pic.twitter.com/o0WVuBfW7U
- GazzettaWorld (@GazzettaWorld) January 26, 2016
Vincenzo Piscitelli, who is assisting the investigation, explained how several practices employed by clubs were being examined to determine whether correct payments of taxes were being made, starting with the payment of agent fees.
"Footballers' agents would invoice fictitious amounts only to the football clubs for their services rendered, pretending that their activity as intermediaries was in the exclusive interest of the club, while in fact it was the interests of the players they represented that were being protected," the prosecution office told news agency ANSA.
"This was one of the fraudulent mechanisms which has led to the searches and seizure of assets from clubs of Serie A and B. Furthermore, the clubs, for their part, were benefitting from the undoubted advantage of being able to deduct these fees entirely from the taxable income, benefitting also from the tax allowance on the added value related to the pseudo service being received exclusively for them.
"In this way, the players were being permitted not to declare what was substantially a fringe benefit, recognised to them by the football clubs who would also assume the costs for this brokering in favour of the player.
"In other words, the sum paid by the clubs represented earnings which should effectively have been credited to the player and, as a consequence, the football club would omit the payment of any fiscal deductions and social security payments on the overall income they were due to pay the player."
Piscitelli went on to explain how certain Argentine agents had set up fake companies in tax havens to avoid paying the taxes that were "owing in the country where the income was being produced (Italy) and of their residence for tax purposes (Argentina), outsourcing the funds from their professional activities".
A total of approximately €12 million is suspected to have been evaded fraudulently and the raids on Tuesday, and consequent seizure of assets, was a "pre-emptive measure to recoup the sums which have been illegally withheld from the treasury by those under investigation."