Romanian businessman Cristian Fughina and his wife Alina Fughina, who owned one of the largest IT&C retailers in Romania, Ultra Pro Computers, which went bankrupt in 2010, on Thursday, September 18, were held by prosecutors together with two other people for embezzlement and money laundering.

After questioning and home searches, investigators at the Organized Crime Investigation Directorate DIICOT found that the Fughinas and three other people embezzled money from the company that owned the Ultra Pro Computers network (which was called K Tech Electronics) and tried to hide them in off-shore accounts. The damages in this case amount to EUR 10 million, which is mainly money lost by the state and the company’s creditors when it went bankrupt.

The suspects used a large number of off-shore firms in their scheme. According to DIICOT prosecutors, in July-August 2008, K Tech Electronics closed 24 contracts to sell IT equipment to four off-shore companies which were controlled by local businessman Laszlo Kiss. The total value of the contracts was of more than EUR 16 million.

According to the contracts, if K Tech Electronics couldn’t deliver the merchandise it was bound to pay damages to the four companies that would equal the value of the contracts, although it had not received any money up from for the merchandise. Of course, the company didn’t deliver on its contracts and the four off-shore companies managed to obtain enforcement decisions against it for the respective sums. As a result, K Tech Electronics paid EUR 11 million to these off-shore companies, which were also allegedly controlled by the Fughina family, with Laszlo Kiss as a front.

After this, they tried to wipe their traces by forcing the company into insolvency, the prosecutors determined. One of the suspects investigated in this case made a full confession. The prosecutors also had support from the Romanian Information Service (SRI).

K Tech Electronics, which had been established by Cristian and Alina Fughina in 1997, reached more than EUR 60 million in sales in 2008. In 2009, the company’s sales fell dramatically and in 2010 it went bankrupt. At that moment, the company had EUR 28 million in debt. The largest creditor was Banca Romaneasca, who had loaned EUR 3.5 million to the company.

Andrei Chirileasa, andrei@romania-insider.com