Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

German cum-ex mastermind handed 8-year jail sentence for tax fraud

German cum-ex mastermind handed 8-year jail sentence for tax fraud

A tax lawyer, alleged to have masterminded one of Germany's biggest post-war frauds, was sentenced to eight years in jail on Tuesday after a landmark trial that has gripped the country.
Hanno Berger, a 72-year-old former tax inspector turned legal tax expert, is the most high profile professional to be convicted after sprawling investigations into the cum-ex dividend stripping scheme, which some experts estimate has cost German taxpayers around 10 billion euros ($10.5 billion).

Berger, who fled to Switzerland in 2012 before being extradited to Germany in February, was also ordered to repay more than 13 million euros as he became the 11th man convicted in Germany over the scandal after an eight-month trial.

Germany and Denmark are leading cross-border investigations into the trading scheme, which involved banks and investors claiming multiple bogus tax rebates on dividends, aided by now-closed loopholes in their tax systems and the failure of authorities to spot and halt the practice.

Berger's sentence is the longest to date after around eight years of investigations that government officials say span around 1,500 suspects and 100 banks on four continents.

In closing arguments at the Bonn court last week, prosecutors accused Berger of orchestrating tax scams that siphoned 278 million euros from German taxpayers.

Berger rejected accusations of tax fraud, although he conceded he should have paid better heed to a 2009 finance ministry letter that expressed concerns about the "tax optimisation scheme". He also insisted some transactions were legal at the time.

Judge Roland Zickler said the case turned on a particularly serious form of white-collar crime, labelling Berger "the inventor of cum-ex 2.0" because his schemes were so prolific.

"You were right at the centre," he told Berger.

Richard Beyer, a lawyer representing Berger, said his client would study the judgment before deciding his next steps.

MILKING THE STATE

Prosecutors said Berger designed and promoted the cum-ex scheme, defrauding the German state and profiting, along with a colleague, of 27.3 million euros between 2007 and 2013.

Berger is on the hook for half. The former colleague, who cannot be named for legal reasons, is due to pay the remainder, although the court heard that his efforts to pay his share have been partly blocked by a bank on compliance grounds.

The scheme, which flourished after the 2008 credit crisis, involved the rapid dealing of company shares around dividend payout days, blurring stock ownership and allowing multiple parties to claim rebates.

The scandal has sparked a public and political outcry as ordinary Germans face a cost-of-living crisis.

Authorities have raided the German branches of companies including Barclays (BARC.L), Bank of America (BAC.N), JP Morgan and Morgan Stanley in their investigations. All four banks have said they are cooperating with inquiries.

In September, Bank of New York Mellon Corp (BK.N), Germany's Warburg Group and Deutsche Bank (DBKGn.DE) said they would pay a combined 60 million euros to tax authorities over the scandal.

Berger has also been charged by Frankfurt prosecutors over another alleged cum-ex tax fraud, valued at 113 million euros, with a trial in the city of Wiesbaden which is expected to reach a verdict next year.

"Even if there are those who might have wished for a longer sentence, the key takeaway today is that the law is more powerful than criminal money," said ex-lawmaker Gerhard Schick, who instigated a parliamentary inquiry into the scandal.

($1 = 0.9484 euros)
Newsletter

Related Articles

Budapest Post
Close
0:00
0:00
Charlie Munger, calls for a ban on cryptocurrencies in the US, following China's lead
Shell reports highest profits in 115 years
EU found a way to use frozen Russian funds
First generation unopened iPhone set to fetch more than $50,000 at auction.
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
China is opening up for foreign investors.
Tesla reported record profits and record revenues for 2022
Germany confirms it will provide Ukraine with Leopard 2 tanks
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
Hungary ready to sue EU over cuts to Erasmus funding
EU against democracy: Hungary's mail-in poll on Russia sanctions dismissed by Brussels
2023 - The Year of the Rabbit
Israelis rally in three cities against Netanyahu legal reforms
Tesla slashes prices globally by as much as 20 percent
Japan prosecutors indict man for ex-PM Shinzo Abe murder
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Dirty bomb fears as URANIUM is found in cargo at Heathrow
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
Saudi Arabia set to overtake India as fastest-growing major economy this year 
International medical experts speak out against COVID-19 restrictions on China
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Saudi Arabia’s female ambassadors: Who are the five women representing the Kingdom?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
Clashes erupt in central Paris after shooting at a Kurdish cultural center
×