Brazil Cracks Down on $4.8B Fuel‑Sector Tax Evasion and Money‑Laundering Network

Brazilian authorities launched a coordinated multi‑state police operation on Thursday to dismantle a large tax‑evasion and money‑laundering network tied to the fuel industry. Officials say the group under investigation is the country’s largest tax debtor, owing more than 26 billion reais (about $4.8 billion). State and federal investigators executed 126 search‑and‑seizure warrants across five states targeting individuals and companies linked to the scheme.

According to Brazil’s Federal Revenue, the network used a web of domestic companies, investment funds and offshore entities to obscure and shield profits. Authorities have not formally named targets, though local media have reported the probe involves Grupo Fit, a fuel refinery; Grupo Fit has not issued a public response to inquiries.

Finance Minister Fernando Haddad said the operation is part of a broader crackdown on criminal links within the fuel supply chain. He noted a prior investigation in August flagged roughly 40 fuel‑sector investment funds allegedly used to conceal assets for members of the First Capital Command (PCC), Brazil’s largest organized‑crime syndicate.

Investigators say the PCC — founded in 1993 inside São Paulo’s Taubaté penitentiary and long involved in drug trafficking and extortion — has diversified in recent years into complex financial schemes and legitimate‑appearing investments. Authorities traced a pattern of capital flight that included the creation of U.S.‑based investment vehicles and offshore entities.

Federal authorities reported finding more than 15 U.S.‑based offshore entities that transferred roughly 1 billion reais (about $186 million) back to Brazil to purchase equity stakes and real estate. Haddad singled out operations set up in Delaware, describing them as part of "a serious international triangulation scheme," and said one recent circuit involved sending 1.2 billion reais (roughly $223 million) to funds in that state.

"The scheme works like this: loans are issued to these funds — loans suspected of never being repaid — and the money then returns to Brazil as supposedly legal investments in economic activities," Haddad said. "But the money sent abroad is not legitimate."

Haddad also said he has pledged to President Luiz Inácio Lula da Silva to seek deeper international cooperation with the United States to combat organized crime and illicit finance, a push he framed as complementary to ongoing trade and tariff discussions between the two countries' leaders.

The operation underscores growing scrutiny of the fuel sector's financial networks and signals increased coordination between Brazilian agencies and international partners to follow illicit flows, seize assets and pursue those responsible.