By Isabelle Yr Carlsson
GLOSTRUP, Denmark (Reuters) -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 9 billion Danish crowns ($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 crowns.
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.
‘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 U.S. citizens over the schemes.
(Reporting by Isabelle Yr Carlsson and Jacob Gronholt-Pedersen, writing by Louise Rasmussen, editing by Terje Solsvik)
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