British hedge fund founder jailed over $1.3 billion tax scam in Denmark
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British hedge fund trader Sanjay Shah was sentenced to 12 years in prison by Danish judges for orchestrating a billion-dollar tax scam, the heaviest jail term handed down so far in Europe’s sprawling Cum-Ex trading scandal.
A Danish district court on Thursday convicted the Solo Capital founder of serious fraud for creating a scheme that duped the Nordic nation’s treasury out of more than 9 billion kroner ($1.3 billion US) through thousands of sham dividend tax refund applications between 2012 and 2015.
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Shah, who’s been held in custody since he was extradited to Denmark from Dubai a year ago, can appeal the decision. The trader, who arrived in court wearing a Christmas elf hat, has consistently denied any wrongdoing, claiming he merely took advantage of legal loopholes.
Denmark along with Germany has been at the heart of what has been one of Europe’s biggest tax scandals involving thousands of bankers, traders and lawyers, who exploited dividend payout laws across Europe to reap duplicate tax refunds.
Shah is the third trader to be convicted in Denmark in relation to the scandal, which cost the nation a total of 12.7 billion kroner. Last year fellow British trader Anthony Mark Patterson was sentenced to eight years in prison after pleading guilty to helping Shah operate the hedge fund’s trading strategy.
At the final court hearing in September Shah argued he was never going to be able to get a fair trial because he’d been labeled guilty by Danish government ministers from the start.
The 54-year-old will also be deported from Denmark and banned from entering the country, while more than 7 billion kroner and real estate will be confiscated from Shah, the Danish court ruled.
Denmark’s state prosecutor had recommended Shah be imprisoned for 12 years, arguing he was the mastermind behind the scheme and that most of the money had flowed into his pockets.
In London, the Danish tax agency has also sued Shah and dozens of traders and businesses in a civil case that’s still running.
In Germany, roughly 1,800 people are being investigated, with several lawyers, bankers and asset managers already handed prison terms. Hanno Berger, a former tax lawyer, has been sentenced twice over Cum-Ex trades.
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