Britain’s biggest ever benefit fraud scheme was exposed after a lone Bulgarian police officer told British authorities that his city was suddenly awash in cash and criminals were “living like barons”, The Telegraph can reveal.
Five Bulgarian nationals admitted stealing more than £50 million from taxpayers last month and appeared on the first day of their three-day sentencing hearing at Wood Green Crown Court on Tuesday.
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 ‘clients’ and joked about the Department for Work and Pensions’ inability to catch them in messages shared on WhatsApp.
Their plan unraveled when Inspector Vassil Panayotov, a detective based in Sliven, at the foot of the Balkan Mountains, launched an investigation into the sudden influx of cash into his town after noticing properties being built there and residents wearing designer clothes .
He found that thousands of people, many of whom had never visited Britain, were receiving up to £2,500 a month in benefits from Britain.
He alerted British authorities through the British Embassy in Sofia and a series of raids were carried out in North London in May 2021.
Mr Panayotov said the true scale of the fraud was likely hundreds of millions of pounds higher than estimated.
He told The Telegraph: “I first became suspicious when I started seeing the influx of money into Sliven. I wondered how these people got so much money.
“I received information from contacts that hundreds of people were receiving social benefits from Britain, taking advantage of weaknesses in the British social system.
“When I received that information, I started checking myself and started my own investigation. Ultimately I came to the conclusion that we were talking about perhaps £200 million a year from Britain.
“The money that came into Sliven transformed the area. That happened in terms of property, but people also bought designer clothes and opened shops and casinos.
“I gave the information to the British police and they started their own investigation into the gang.”
On Tuesday, prosecutor Tom Little KC said in court that investigations were currently underway in Britain into several other people suspected of involvement.
Speaking about the scale of the fraud, he said: “In total, the crime involved many thousands of fraudulent Universal Credit (UC) claims made to the DWP and paid out.
“Despite its size, the three conspirators’ fraudulent scheme was both simple to execute and highly effective.”
Universal Credit was gradually introduced from 2013 to streamline previous benefits such as child tax credit, housing benefit and income support, and is typically given to people on low incomes or who are unemployed.
Mr Little told the court that false claims had been made that UC used real people who were “almost always Bulgarian” and who were “complicit and also benefited financially”.
He said: “The claims were supported by a series of forged documents and lies told to support the false claims.
“The forged documents included fictitious rental agreements, false pay slips and forged letters from landlords, employers, schools and GPs.”
He said most of the claimants “lived in Bulgaria and filed claims falsely claiming that they lived and worked here when this was not the case”.
He added: “Many traveled here for a short period to support the claim before returning to Bulgaria while the claim was still ongoing. Some have never even been here.”
The main architects of the fraud, the court heard, were Ali and Nikolova.
The gang would start by finding ‘customers’ in Bulgaria whose personal details they could use to fraudulently pretend they lived and worked in Britain.
They then produced a series of forged documents, including fictitious rental agreements, false 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 Britain and attend interviews, or take photographs to “prove” they were in the country and entitled to it if necessary on benefits.
At the height of the fraud, messages and images were exchanged on a WhatsApp group, which showed the gang ridiculing the “naivety of the DWP”.
The DWP sometimes asked for photos of people outside properties with the front door open to prove they lived there.
The gang took a photo of a fraudulent claimant outside an address and then photographed the image to make the door appear slightly ajar.
They also developed a system using hundreds of burner telephones passed to waiting customers via a bucket pulley system.
In Bulgaria, the city of Sliven, a once thriving industrial city famous for its textile industry, has recently fallen 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 notorious as a source of young girls who are then trafficked into the sex industry.
Speaking exclusively to The Telegraph from the run-down offices of the organized crime unit in Sliven before the sentencing, 47-year-old Panayotov said he believed the gang earned up to £200 million a year.
Once the benefits were approved, Mr Panaytov claimed the ‘customers’ would have to pay a one-off commission of between £500 and £800, after which they would receive an average of between £2,000 and £2,500 per month.
He said: “Our research showed that a few 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 running a similar scheme at a similar level.”
The Telegraph understands the gang would allow customers to receive benefits for two months before transferring the money into their own accounts.
From then on, they would receive all the money for themselves and the ‘commissioners’ who helped find suitable candidates in Sliven.
Insp. Panayotov said the small Bulgarian town had been “transformed” by the money and that many of the customers were “living like barons.”
Video and photos shared with The Telegraph show people throwing wads of cash into the air. In another we see them paying a wedding singer €20,000 for one song.
Although Bulgarian authorities believe the money is laundered, there is no evidence that the people in the video were aware of any crime.
Showing the footage to The Telegraph, Mr Panayotov said: “That’s your money. That’s British money.”
The officer said the majority of customers and commissioners were from the Roma minority community.
When The Telegraph visited the Roma areas of the city, many of the buildings appeared to be developed into large ‘mansions’.
Mr Panayotov continued: “There are currently 30 casinos in Sliven. These casinos are often built by criminals who have a lot of money.
“The fraudsters make money easily and spend their money easily, without any plan. They live like barons.”
The Telegraph also visited the city of Plovdiv, about an hour outside Sofia, where Ali part-owns a restaurant and a business.
Ali fled Britain to Bulgaria, but was extradited back to Britain on February 25 last year to face justice.
It emerged in court that Todorova and Nikolova had also tried unsuccessfully to flee the UK after their first arrest in May 2021.
A man at the Dreams cafe in Plovdiv, where Ali was arrested, said the money the gang had made was “insane”.
He told The Telegraph that he would “love to visit Britain”, adding: “Everyone wants”.
In Britain, all five defendants, with the exception of Todorova, lived in and around the Wood Green area of north London.
Following a tip-off from Mr Panayotov, the Department for Work and Pensions conducted its own investigation before launching a series of raids.
In 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 sneakers.
More than £40,000 in cash was found at Ali’s home address, as well as a number of photographs of bank notes, a Tiffany ring and a video showing him with a large amount of cash.
Mr Panayotov said he could not understand how the scheme had gone on for so long without authorities in Britain noticing.
“Initially the British officers in the embassy said that was not possible,” he said. “Even our director was surprised by the size of it.”
After the arrests, Panayotov said he had been invited to celebrate the Queen’s Birthday party at the British Embassy in Sofia.
He added: “Many people in Sliven hate me now.”
The DWP said its investigators were working to track down and catch the fraudsters, gathering extensive evidence of fake rental agreements and shell companies set up to show false employment claims, including fake pay slips and GP notes. The group also created many fake identity documents.
It described the case as ‘complex’, requiring the processing of large amounts of intelligence and securing police resources before the arrest.
It said it would stop payments where possible once sufficient evidence had been gathered.