NRI Sanjay Shah sentenced to 12 years in Denmark for
role in cum-ex' tax fraud.

Los Angeles/ Dec 13, 2024
NRIpress.club/Ramesh/ A.Gary Singh

Danish court has sentenced British hedge fund trader NRI Sanjay Shah to 12 years in prison for orchestrating one of the largest tax fraud cases in the country’s history. Shah, 54, was found guilty of defrauding Denmark of 9 billion Danish crowns ($1.27 billion) in dividend tax refunds through a controversial trading scheme between 2012 and 2015.

The case revolves around the so-called "cum-ex" trading strategy, which exploits loopholes in tax systems to claim multiple refunds on a single dividend payment. Shah’s scheme reportedly involved rapidly trading shares around dividend payout dates, creating the illusion of multiple owners eligible for tax refunds. Prosecutors argued that the trades were directed by Shah’s London-based hedge fund, Solo Capital Partners, and deprived the Danish treasury of significant revenue.

Wearing a red Christmas hat in court, Shah maintained his innocence, insisting he had operated within legal bounds by exploiting a "loophole" in the system. However, the court dismissed his defense, ruling that the scheme was fraudulent. Shah has since appealed the verdict to the Danish High Court.

The 12-year prison sentence, the maximum penalty under Danish law for tax fraud, is among the harshest in the country’s history. “This is a tough sentence,” said Florian Hollenbach, associate professor at Copenhagen Business School. “The verdict sends a strong signal to tax authorities and prosecutors worldwide that complex tax evasion cases can and should be pursued.”
Ahead of the verdict, Shah described himself as "a greedy bastard" in an interview with Danish broadcaster TV2, likening his trading exploits to a video game. “It was like playing Space Invaders, trying to beat my high score,” he said.

Shah’s troubles extend beyond Denmark. He is also facing a $1.83 billion civil tax fraud lawsuit in London, filed by the Danish tax authority, which is expected to conclude in April 2024. During this separate case, Shah admitted via video link from Denmark that his trading strategies allowed participants to claim ownership of shares they neither owned nor paid tax on, enabling fraudulent tax refund claims.

Shah’s legal woes escalated in 2022 when he was apprehended in Dubai and later extradited to Denmark. His arrest marked a significant victory for Danish authorities, who have been working to recover billions lost to similar tax fraud schemes across Europe in the aftermath of the 2008 financial crisis.

Danish Justice Minister Peter Hummelgaard expressed satisfaction with the outcome, stating, “This ruling demonstrates that no one is above the law, and we will hold individuals accountable for crimes that harm our society.”

The case has drawn widespread attention for its scale and the boldness of the scheme. It also highlights the broader issue of cross-border tax fraud and the need for international cooperation to tackle such crimes effectively.

With an appeal already filed, Shah’s legal battles are far from over, but Thursday’s verdict is a milestone in Denmark’s efforts to crack down on financial fraud.

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