Investigators have swooped in on a network of people and companies allegedly involved in a massive gold-refining scam that bilked the Quebec and federal treasuries.

Revenue Quebec agents are probing sales of $1.8 billion by the network, with alleged provincial sales-tax evasion in excess of $150 million. The agency is also investigating evasion of the federal GST on the same sales.

Residences, offices, accountants and bankrupcy trustees were slapped with search warrants as more than 175 Revenue Quebec agents staged raids in the Montreal area on Thursday.

The revenue agency says the network allegedly used a system of repetitive and false billing in the transactions involving more than 100 companies.

It also says false tax returns were prepared for certain companies that provided the fake invoices.

Revenue Quebec says the alleged scam arises out of the conversion of scrap gold to pure gold and its resale, which is open to a tax refund. However, in this case, the transactions allegedly never happened.

"It's important to note that this tactic involved artificial transactions. There was never actually any real commercial activity," a Quebec government statement said.

"The only goal of these transactions was to be able to claim a tax refund...

"The same cycle [of phony transactions] would be repeated and, each time a new cycle started, the size of the ploy increased as did the profits from the fraud, along with the sums received from the state."

Those found guilty would have to pay the amounts evaded, plus interest and penalties. Hefty fines could also be imposed, as well as prison terms up to a maximum of five years.

The raid was announced in a Quebec government press release Thursday, which named some of the people and companies targeted in the raids.

No arrests were immediately announced, however.