The Court Acquits Most Defendants in Cyprus Golden Passports Case

The Nicosia Criminal Court has acquitted the majority of defendants in the case concerning the now-defunct citizenship-by-investment program. Prosecutors were unable to prove charges of conspiracy to defraud the state.

The case revolved around the naturalization of a foreign national, Mohamed Salem, along with two of his relatives, Bahaa Salem and Esraa Salem. Mohamed Salem had invested in Cyprus with the goal of obtaining a Cypriot passport.

However, the defendants were not the investors themselves but developers, businesspeople, and lawyers who assisted in submitting the citizenship applications. At the time, the criteria for obtaining citizenship included a €2 million investment in real estate.

The details of the case emerged as part of a public investigation into the citizenship-by-investment scheme.

According to Cyprus Mail, the alleged offenses occurred between 2017 and 2019. Prosecutors argued that the defendants conspired to defraud the state, including submitting falsified documents to falsely demonstrate compliance with the €2 million investment requirement.

Court Findings

After examining the evidence, the court concluded there was no intent to defraud the Republic of Cyprus. Instead, it identified irregularities and administrative errors in the submitted documentation.

As a result, the court acquitted the following individuals and entities of conspiracy to defraud:

• Lawyers Photos Tsangarides and Elli Michaelidou
• Director of Zavos Group, Michalis Michael
• Companies PHC Tsangarides LLC and Fullserve Secretarial Ltd

Guilty Verdicts for VAT Evasion

Despite the acquittals for conspiracy charges, the court found Larina Estates Ltd and its director, Michalis Zavos, guilty of VAT fraud.

The court determined that they intentionally concealed invoices related to the sale of apartments. These properties, it was revealed, were not used by the foreign investor as permanent residences.

Under Cypriot law, properties designated as permanent residences under the naturalization program are eligible for reduced VAT rates.

Background on the Citizenship-by-Investment Program

The citizenship-by-investment scheme was officially terminated following public outcry and a damning Al Jazeera documentary, which exposed irregularities in the program.

A public investigation, concluded in June 2021, found that between 2007 and 2020, the Cypriot government violated the law by granting citizenship to more than 6,700 applicants. Reports suggest that over half of these passports were issued unlawfully.