The fraud was detected through on-the-spot-checks. The Managing Authority initiated a fraud response. As a result, of the inspections and the subsequent findings, the MA decided that the paid subsidies should be recovered and initiated a recovery procedure by sending letters for request for voluntarily recovery.
The beneficiaries refused to pay the debt and a civil lawsuit was initiated.
At the time of the pre-accession programmes and the first programming period 2007-2013, such cases were decided on by a judge in ordinary courts (not administrative ones). At the court of first instance (Regional court), the judge requested that the MA provides the on-the-spot-check protocols, which the MA failed to do (the reasons remain unknown). As a result, the judge did not accept the legal fact that the on-the-spot-checks occurred and ruled in favour of the beneficiaries.
The MA was obliged to appeal the decision, in order to protect the financial interests of both EU and national budgets. The second instance court (District court) requested the same documentation from the MA, and the MA once again failed to provide it. As a result, the appeal was rejected.
As the MA was obliged to again appeal the decision, the case went to the third and final instance (Supreme court). Just as in the previous two cases, the MA lost the case as they were still unable to provide the requested documentation. As a result, the beneficiary kept all the funds and the MA was left with the obligation to pay for the proceedings. The EU funds were reimbursed using the national budget (written off after a 2-year period in which the MA failed to repay the amounts).
Several years later, an investigation was launched, however the period of limitation had already passed. It established that the goal of the beneficiaries was to circumvent the maximum grant allowance of 250 000 EUR, by applying for a total 750 000 EUR in three individual applications, in order to build one big hotel.