Officers raided several locations around southern and central Quebec, armed with arrest warrants for 17 people wanted on charges of theft over $5,000, money laundering, gangsterism and conspiracy.
Sgt. Daniel Thibaudeau said the police were first notified to the alleged fraud in 2010 after Revenu Quebec noticed irregularities in some of its files.
Investigators believe the suspects, all involved in construction companies that specialize in foundation work, created fake companies and used fraudulent invoices to generate cash. The fake invoices billed for labour and included GST and PST that was allegedly never paid to the government.
Police allege the construction entrepreneurs used the cash to pay employees under the table and for personal expenses.
The provincial police launched an investigation, dubbed Operation Tourniquet, in 2011 that led to raids on residences, vehicles and warehouses north of Montreal.
"It allowed us to discover this network of fake companies, which systematically, repetitively and organized fashion conspired to commit these crimes of a fiscal nature," Thibaudeau said.
Tuesday's arrest warrants are tied to that investigation.
The investigation is not linked to the province's corruption inquiry or investigations by the permanent corruption unit, he said.
None of the 17 people being sought by police has known links to organized crime groups and none was previously known to police.
Thibaudeau said the value of the fraud could rise as the investigation is ongoing.
Some of the accused are expected to appear in Montreal court this morning. Others will appear via video.