British hedge fund trader Sanjay Shah was sentenced by a Danish court to 12 years in prison after being found guilty on Thursday of defrauding the state to the tune of $1.3 billion in a "cum-ex" tax case.
The Glostrup city court found that Shah, 54, was behind a complex trading scheme known as "cum-ex" that fraudulently secured nine billion Danish krone ($1.27 billion) in dividend tax refunds from the Danish treasury between 2012 and 2015. He was also found guilty of attempting to defraud the state of an additional 553 million krone.
Denies wrongdoing
Shah has denied any wrongdoing, arguing earlier in court that he used a legal loophole, which meant the trades did not break the law, and that he should be acquitted. Prosecutors had sought the maximum sentence of 12 years in prison. Shah's lawyer Kaare Pihlmann said he would appeal.
Directed by Shah's London-based hedge fund Solo Capital Partners, investors rapidly traded shares around dividend payout day, creating an illusion of numerous owners, each seemingly eligible for tax refunds on dividends, according to prosecutors. Shah had said in court that the trades had allowed participants to claim ownership of shares, thus being entitled to tax refunds even if they did not own the shares and never paid any dividend tax in Denmark.
Extradited from the UAE
Mr Shah, who lived on Palm Jumeirah in Dubai, was extradited in December 2023 from the UAE to Denmark to face trial. An international warrant for Shah's arrest was received by Dubai Police on January 7, 2023 and he was arrested five months later in the emirate's Al Rafaa district.
In September 2023, judges in Dubai presiding over a civil lawsuit filed by the Danish government ruled that Shah must repay $1.25 billion to the Danish state. The UAE said it was committed to combating all forms of organised crime.
"The security, judicial, financial, and law enforcement authorities in the UAE are steadfastly working towards undermining organised crime in all its forms, within the framework of international co-operation with partners," said a statement carried by state news agency Wam. "The relevant entities in the UAE are resolute in following international standards to combat money laundering and the financing of terrorism."
Schemes affect European countries
"Cum-ex" schemes are believed to have drained billions of dollars from the public treasuries of several European countries, including Germany, Austria, and Belgium. Investigations led by Germany and Denmark have triggered bank raids, arrests and prosecutions. Denmark has charged a number of British and US citizens over the schemes.
