Prison Term for British Trader in Tax Fraud Case

tax fraud caseA complicated tax crime earned a hedge fund trader about $1.3 billion in ill-gotten goods. It also earned him the next 12 years in prison.

 

A longtime tax fraud in the European Union (EU) caught up with one player recently. Sanjay Shah is a hedge fund trader who operated a complex tax operation in Denmark from 2012 to 2015. Shah’s involvement in Denmark is only one part of a much larger financial pile-on that occurred in the EU starting in about 2001.

 

The scheme took advantage of dividend arbitrage stock transactions called "Cum-ex", which is Latin for “with without.” In this scheme, international financial firms, insurance companies, traders, and lawyers took advantage of a tax loophole that allowed multiple parties to collect a tax refund for a dividend payout without identifying the actual owner.

 

Sanjay targeted Danish banks for a four-year period, garnering more than one billion in tax refunds from the Danish treasury. Referring to the loophole as a “defect,” tax crime attorneys for Sanjay claim the loophole he used was legal. That said, media reports note that Sanjay referred to himself as a “greedy bastard” during an interview for Danish television. Sanjay remarked that he likened the trading scam to playing “Space Invaders,” working to better his score with each round.

 

Across the EU, different banks, traders, and entities played out the Cum-ex trade in other countries. Just some of the banks that were allegedly involved include Morgan Stanley, Bank of America, Deutsche Bank, Warburg Bank, JP Morgan, and many more.

 

According to Tax Justice Network, the total cost (so far) to the treasuries of these countries is about $55 billion, including hits taken by Switzerland, Poland, Germany, Denmark, Italy Belgium, Norway, and Austria. Possibly the largest tax theft in European history, impacted countries did little to warn each other about the scam. Litigation is ongoing in Germany, with over 1000 investigations open into people who engaged in Cum-ex trades.

 

As for Shah, he removed himself to Dubai in 2009 from where he was finally extradited in 2024. Shah lived in style in Dubai, residing near the beach with both a yacht and a 10,000 square foot villa. According to media, Shah attended his sentencing wearing a red Christmas hat. His legal team quickly filed an appeal to the Danish High Court.

 

Facing allegations of tax fraud or diversion of employment taxes? Speak with our legal group today

The legal team at Robert J. Fedor, Esq., LLC delivers strategic representation and guidance with compliance questions, tax litigation, and criminal tax defense. Call 440-250-9709 or contact us online today.

 

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