French fraud trial has 124 defendants

The Palais de Justice has hosted some of France's biggest cases

A trial with 124 defendants has begun in Paris, after what prosecutors say is one of the biggest scams in French history.

The number of defendants is so huge that a courtroom has had to be specially built in the Palais de Justice in Paris.

Trial facts

124 defendants

34 civil plaintiffs

$77m (540m Euros) allegedly stolen

Three defendants in custody, 13 others on the run

Trial expected to last 10 weeks

The accused are said to have defrauded 34 banks, institutions and companies in an elaborate scheme which allegedly saw them arranging multiple loans.

The trial is expected to last more than two months. Some of the 124 accused are on the run and will be tried in their absence.

"This is an ordinary case of fraud made unusual because of the number of defendants," said lawyer Jean-Yves Le Borgne, representing several of the accused.

Most of the defendants worked in the French capital's commercial district, the Sentier, traditionally home to the "rag trade", where many small clothing factories employ immigrant labour.

Prosecutors claim the defendants set up a series of networks which created a pyramid-style loan scheme.

This is a scheme as old as the trade business

Fraud investigator

Cash raised from one loan would be used to convince another bank to part with money, and so on, until banks were lending huge sums, unaware that the debts would never be paid back.

Some of the traders allegedly set up dummy companies, ordered huge quantities of goods which they never paid for, and then filed for bankruptcy.

The scale of the fraud totalled an estimated $77m (540m Euros), say investigators.

"This is a scheme as old as the trade business," one investigator said.

"In the end the banks have given loans that they will never recover."

Net widens

The alarm was raised in 1997, and a trial was initially scheduled to take place two years later, but was delayed for legal reasons.

The investigation has meanwhile led to Austria and Belgium, where alleged money-laundering networks connected to the French inquiry have also been uncovered.

The scale of the trial has posed logistical as well as legal problems.

The specially-constructed court room had to be big enough to house not just the dozens of defendants, but also the 34 plaintiffs and their lawyers.