Crime gangs from Eastern Europe are operating here with 'impunity' due to EU free movement rules, a disturbing report warns today.

Human traffickers run huge benefit frauds in the UK, including one that was used to fund a housing development in Slovakia.

The vile trade also includes the sale of young girls for prostitution and sham marriages. In some cases, 'customers' from outside the EU are requesting women with EU passports so they can make them pregnant. The migrants – desperate for a foothold in Britain – then claim they have a human right to a family life in the UK to raise the child.

Vicious: A menacing Eastern European gang leader with his Rottweiler. Crime gangs from Eastern Europe are operating here with 'impunity' due to EU free movement rules, a disturbing report warns today

The Centre for Social Justice report, written by a former senior aide to Home Secretary Theresa May, is based on interviews with senior police and officials in Britain and overseas. It offers a deeply disturbing insight into how, since the EU expanded to include former Eastern Bloc members in 2004, a huge market has opened up in what it calls the 'modern slave trade'.

In the past, trafficking gangs had to bring in migrants from outside the EU – which meant they would need to pass through border controls.

But they are now able to target people in impoverished communities in Slovakia, Poland, Romania and Bulgaria with open access to Britain.

One of the most serious unintended consequences of free movement in the EU is that it has made it much easier for organised criminal gangs to operate their cross-border business models with impunity The Centre for Social Justice report

Migrants are duped into believing they are travelling to the UK for work and enter the country legally under the EU's Free Movement Directive.

The traffickers then seize control of their bank accounts and travel documents, and force them to work in often gruesome conditions.

The report, written by former Home Office special adviser Fiona Cunningham, says: 'One of the most serious unintended consequences of free movement in the EU is that it has made it much easier for organised criminal gangs to operate their cross-border business models with impunity and without fear of being detected and therefore pursued.'

Significantly, the report has the backing of Mrs May, who has written the foreword.

She has been one of the Cabinet ministers pushing for curbs on EU free movement – including restrictions on countries whose level of wealth is far below that of Britain.

Limits: Home Secretary Theresa May, pictured, has been one of the Cabinet ministers pushing for curbs on EU free movement – including restrictions on countries whose level of wealth is far below that of Britain

The report also warns of Eastern European girls – aged 15 to 25 – being brought to Britain and forced into prostitution, benefit fraud or sham weddings to Asian men seeking a right to remain in the UK. Manchester, Birmingham and Gretna are identified as hotspots – with Scotland targeted so the victims can marry at a younger age.

Shockingly, the report found girls were sold to 'customers' for pregnancy so the buyer could claim he had an article 8 right to a family life in the UK.

Europol, the EU's crime fighting agency, has identified particular problems with children being brought into the UK from Slovakia.

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They are kept under the influence of drink and drugs, to make them easier to control, then sold for sex.

Police in Kent said that, in a single day, 16 such children were taken into care. The report adds: 'Pregnant women are sometimes recruited and forced to sell their babies.'

Action: Mr Cameron has also pledged to crack down on abuse of the benefits system by EU nationals

Romania and Hungry were also identified as countries from which criminal gangs are trafficking women for sex.

Women who are brought to the UK and forced to work in the sex industry are often moved from city to city, with their services advertised online. One website featured 1,000 women based in London.

The report calls on the EU to implement a new system of passenger name records so there is a better chance of tracking people smugglers and their victims who travel by air. But this is being blocked by the EU on privacy grounds.

It would also alert the authorities if a suspected people smuggler was headed towards the UK with a child.

The report says: 'Exploiting the internet and borders made less defined due to European Union policies like free movement, organised crime groups find the trafficking of victims a highly lucrative and accessible crime.'

The Home Office has estimated that, in any given year, there are between 10,000 and 13,000 victims of human trafficking in the UK. In the last Parliament, the Tories passed Europe's first Modern Slavery Act. Traffickers involved in the most serious cases now face possible life sentences.

David Cameron has also pledged to crack down on abuse of the benefits system by EU nationals. In November 2013, he announced new rules stipulating that incomers can receive out-of-work benefits only once they have been living in the country for three months.

UK benefits scam builds a Slovak village

By Ian Drury, Home Affairs Correspondent for the Daily Mail

A crime gang from Slovakia duped unsuspecting families into travelling to the UK so they could scam hundreds of thousands of pounds in benefits – and send the cash back to a village known as 'Smartie Town'.

The profits were funnelled to the 1,000-year-old village of Pavlovce nad Uhom in the Michalove district of Slovakia where they were used to build houses.

The homes are partly funded by the UK taxpayer and local residents have nicknamed them 'Smarties' after the chocolate sweets because the houses are painted brightly and in different colours.

Vivid: A house in so-called Smartie Town, where a crime gang funnelled profits from a benefits scam. Homes in the 1,000-year-old village, such as the one pictured above, are partly funded by the UK taxpayer

When the gang feared UK officials might become suspicious, they changed tactics – sending the migrants to Canada instead to claim asylum and state support there.

The victims, expecting to work legally, had been transported to Britain in coaches. But once they were across the border, the criminals seized their passports and other documents and forced them into domestic servitude, slave labour and welfare fraud – signing up for several state handouts including tax credits.

Gang members arranged housing and took their victims to open high street bank accounts using a 'translator' who was also in on the lucrative scam. Benefits were then paid into accounts in the names of the victims but controlled by the traffickers.

Scam: Three Slovakian crooks, including Darina Balogova, pictured, raked in £1.2million by bringing 'fake mothers' to Britain to claim benefits falsely

The sums of money made by the Eastern Europeans from trafficking victims using this kind of exploitation were huge.

In another case, three Slovakian con artists raked in £1.2million by bringing 'fake mothers' to Britain to claim benefits falsely.

They persuaded women from their home country to live in the UK and fraudulently claim child and working tax benefits. The family splashed the vast amounts of cash they pocketed on a life of luxury, gambling in casinos and going on spending sprees to buy gold and diamonds. The crooks – Darina Balogova, her husband Marek Balog, and brother Jaroslav Bado – pulled off one of the largest welfare scams of its kind from a terraced house in Chatham, Kent.

Up to 50 women were brought to Britain under freedom of movement rules and groomed to claim falsely that they were working for a temp agency on low wages so they could receive tax credits.

After the gang had exploited the identities of the women, they allowed them to return to Slovakia, retaining control of their bank accounts, passports, national insurance cards and birth certificates.

Balogova – who never worked a day after arriving in Britain – kept around £30,000 in cash at their headquarters in nearby Rochester. At least £60,000 in stolen benefits were transferred back home.

But the scam was finally exposed when the criminals began using a high street stationer's receipt books to write bogus payslips for the women. HM Revenue & Customs inspectors noticed they were using the same employee number on all the slips.

In November 2011, at Maidstone Crown Court the gang were jailed for tax credit fraud and money laundering. Balogova was sentenced to four-and-a-half years, while Balog was given three-and-a-half years and Bado three years.