Babelgum Founder Arrested in Money Laundering Probe

Babelgum founder Silvio Scaglia was taken into custody by Italian police on Friday, Feb. 26. Law enforcement officials had issued a warrant for Scaglia’s arrest earlier last week as the result of a wide-scale money laundering investigation, and he is expected to be questioned as early as tomorrow, according to a BusinessWeek report.

Scaglia founded Babelgum in 2007 and has been single-handedly bankrolling the London-based video start-up ever since. A Babegum spokesperson went at great lengths today to tell us that the investigation won’t have any negative impact on the company. “Babelgum’s business plan is fully funded for 2010 and beyond,” she said without going into specifics. Still, the arrest isn’t exactly helping the start-up that has been struggling to find its place in the online video world for some time.

Italian law enforcement officials allege that Scaglia was part of a two billion Euro ($2.7 billion) tax fraud and money laundering scheme during his time at Fastweb, the Italian ISP he founded in 1999. They issued a total of 56 arrest warrants last week, and the Financial Times is reporting that police confiscated a number of paintings and other works of art that were purchased with the fraudulent money. Scaglia was abroad when officials issued the warrant, but returned to Italy Friday and was taken into custody at the airport.

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