by The UK’s biggest ever benefit fraud scheme was uncovered after a lone Bulgarian police officer told British authorities that his city was suddenly flush with cash and that criminals were “living like barons”. The Telegraph can reveal.
Five Bulgarian nationals admitted stealing more than £50 million from the taxpayer last month and Tuesday appeared to be the first day of their three-day sentencing hearing at Wood Green Crown Court.
Galina Nikolova, 38, Stoyan Stoyanov, 27, Tsvetka Todorova, 52, Gyunesh Ali, 33, and Patritsia Paneva, 26, were supported by dozens of family and friends. In April they pleaded guilty to fraud and money laundering.
The gang had thousands of “customers” and joked about the Department for Work and Pensions’ inability to take them on in messages shared on WhatsApp.
His scheme came to an end when Inspector Vassil Panayotov, a detective based in Sliven, at the foot of the Balkan mountains, launched an investigation into the sudden influx of money in his city after he noticed that houses were being built and residents were wearing designer clothes. .
It found that thousands of people, many of whom had never visited Britain, were receiving up to £2,500 a month in benefits from the UK.
He informed the UK authorities through the British embassy in Sofia and in May 2021 a series of raids were carried out across north London.
The true scale of the fraud is likely to be hundreds of millions of pounds higher than estimated, according to Mr Panayotov.
He told the Telegraph: “I was skeptical at first when I saw the influx of money into Sliven. I wonder how these people got money like that.
“I received information from contacts that hundreds of people were receiving social benefits from the United Kingdom using the weaknesses in the British social system.
“When I got that information I started to check myself and I started to investigate myself. I finally decided that we were talking about maybe £200 million every year from the UK.
“The money that came into Sliven changed the area. It did so in terms of property, but also people were buying designer clothes, and opening shops, casinos.
“I gave the information to the British police and they launched their own investigation into the gang.”
In court on Tuesday, Tom Little KC, the prosecutor, said there were ongoing investigations in the UK at the moment into many other people suspected of being involved.
Describing the scale of the fraud, he said: “The criminality involved, in total, thousands of fraudulent Universal Credit (UC) claims to the DWP and being paid.
“Despite its scale, the fraudulent scheme of the three conspirators was simple to execute and highly effective.”
Universal Credit was gradually introduced from 2013 onwards to streamline previous benefits such as Child Tax credit, Housing Benefit and Income Support and is usually given to those on a low income or unemployed.
Mr Little told the court that false claims were made to UC using real people who were “almost always Bulgarian” and who “were also motivated and made money”.
He said: “The claims are supported by a range of forged documents and lies told to support the false claims.
“Forged documents included fake tenancy agreements, forged payslips and forged letters from landlords, employers, schools and GPs.”
He said most of the claimants “lived in Bulgaria and made claims where they falsely claimed they lived and worked here when they did not”.
He added: “Many traveled here for a short time to support the claim before returning to Bulgaria with the claim still ongoing. Some of them haven’t even traveled here.”
The main architects of the fraud, the court heard, were Ali and Nikolova.
The gang would set out to find “customers” in Bulgaria whose personal details they could use to fraudulently pretend they were living and working in the UK.
They would then provide a range of forged documents, including fake tenancy agreements, forged payslips, and forged letters from landlords, employers and GPs.
Mr Little said the gang also arranged “hundreds of cheap flights” for the fraudulent claimants so they could travel to the UK and attend interviews, or take pictures “proving” they were in the country and entitled to benefits if necessary.
Messages and images were exchanged on a WhatsApp group at the height of the fraud which showed the gang mocking the “naivety of the DWP”.
Sometimes the DWP will ask for pictures of people outside a property with the front door open to prove they lived there.
The gang would take a picture of a fraudulent claimant outside an address and then Photoshop the image to make the door ajar.
They also developed a system using hundreds of burner phones that were routed to waiting customers using a bucket pulley system.
Over in Bulgaria, the city of Sliven, a once prosperous industrial town famous for its textile industry, has recently been falling into decline.
Large so-called “ghettos” have been built on the outskirts and many of the city’s former factories have fallen into disrepair.
In recent years, the city has also become famous as a source of young girls who are then trafficked into the sex industry.
Speaking exclusively to the Telegraph from the offices of the organized crime division in Sliven before the sentencing, Mr Panayotov, 47, said he believed the gang was making up to £200 million a year.
Once the benefits were approved, Mr Panaytov claimed the “customers” had to pay a one-off commission of between £500 and £800, after which they would receive an average of £2,000 to £2,500 per month.
He said: “Our investigation found that several thousand people were customers of this scheme and it is likely that many are still receiving money through similar schemes.
“Nikolova had at least 5,000 to 6,000 customers and Ali was operating a similar scheme at the same level.”
The Telegraph understands that the gang would allow the customers to receive benefits for two months, at which point they would start diverting the money into their own accounts.
From that point on, they would take all the money for themselves and for “commissioners” who helped find suitable candidates in Sliven.
Insp Panayotov said the small Bulgarian city had been “transformed” by the cash and many of the customers were “living like barons”.
Videos and pictures shared with the Telegraph show people throwing money bags in the air. In another, they are seen paying €20,000 for one song to a wedding singer.
Although Bulgarian authorities believe the money was laundered money, there is no evidence to suggest that the people in the video were aware of any crime being committed.
Showing the film to the Telegraph, Mr Panayotov said: “That’s your money. That’s British money.”
The official said that most of the customers, and the commissioners, are from the Roma minority community.
When the Telegraph visited the Roma areas of the city, it appeared that many of the buildings were being developed into large “Posters”.
Mr Panayotov continued: “There are currently 30 casinos in Sliven. These casinos were mostly built by criminals with a lot of money.
“The fraudsters are earning easy money and spend their money easily, without any plans. They live like barons.”
The Telegraph also visited the city of Plovdiv, about an hour outside Sofia, where Ali has a restaurant and business.
Ali fled Britain to Bulgaria but was extradited back to the UK on February 25 last year to face justice.
In court, it emerged that Todorova and Nikolova had also tried, unsuccessfully, to flee the UK after their initial arrest in May 2021.
A man at the Dreams cafe in Plovdiv, where Ali was arrested, said the money made by the gang was “crazy”.
He told the Telegraph that he would love to visit the UK, adding: “Everyone would”.
In the UK, all five defendants, apart from Todorova, lived in and around the Wood Green area of north London.
After Mr Panayotov was accused, the Department for Work and Pensions carried out its own investigation before launching a series of raids.
At Stoyanov and Nikolova’s flat, detectives found £750,000 in cash as well as a large quantity of designer clothes, jewelery and watches.
Among them were two Emporio Armani watches, two Versace watches, Gucci shoes and some Chanel trainers.
More than £40,000 in cash was found at Ali’s home address, as well as several photographs of bank notes, a Tiffany ring and a video of him with a large amount of money.
Mr Panayotov said he could not understand how the scheme had gone on for so long without UK authorities noticing.
“British officials in the embassy said at the beginning that was not possible,” he said. “Even our director was surprised at the scale.”
After the arrests, Mr Panayotov said he was invited to celebrate at the late Queen’s birthday party at the British embassy in Sofia.
He added: “A lot of people in Sliven hate me now”.
The DWP said its investigators worked to track and catch the fraudsters, gathering extensive evidence of bogus tenancy agreements and shell companies created to show false employment claims, including forged payslips and DG notes. The group also created many false identity documents.
He described the case as “complex” and required working through large amounts of information and police resources to make an arrest.
He said he stopped payments where possible once enough evidence was gathered.
