By Jacob Gronholt-Pedersen
COPENHAGEN (Reuters) – Denmark’s state prosecutor said on Tuesday it had charged six people from the United States and Britain with defrauding Danish tax authorities of more than 1.1 billion crowns ($176 million) in a sham trading scheme.
The charges against three U.S. and three British citizens are connected to the so-called “cum-ex” trading schemes, in which the Danish state has lost more than 12.7 billion crowns in total.
In January, Denmark charged two UK citizens, bringing the total number of people charged to eight.
They are suspected of running a scheme that involved submitting applications to the Danish Treasury on behalf of investors and companies from around the world to receive dividend tax refunds, the prosecutor said.
The defendants face up to eight years imprisonment for “gross fraud” if found guilty, although the prosecutor said the maximum penalty could be raised to 12 years under a special section of the law.
All eight are at large.
“We do not expect them to voluntarily show up for criminal proceedings in which they risk being sentenced to so many years’ imprisonment. So we are working on all conceivable options to ensure that the defendants will be present for the upcoming trial,” prosecutor Per Fiig said in a statement.
The defendants were charged with running the scheme via Germany’s North Channel Bank in 2014 and 2015, the prosecutor said.
In 2019, the bank paid a fine of 110 million crowns by a Danish court for its involvement in the dividend stripping scheme.
The cum-ex trading scheme is also being investigated by authorities in Germany, Belgium and Britain. Last year, two Britons were convicted in Germany’s biggest fraud trial in at least 75 years.
The dividend schemes typically involved the trading of company shares rapidly around a syndicate of banks, investors and hedge funds to suggest numerous owners, each entitled to a tax rebate.
The name “cum-ex” is Latin for “with-without”, illustrating the apparent vanishing of dividend payments.
The Danish Tax Agency has also launched civil cases against U.S. pension plans to recoup the money it has lost.
Denmark charges another six, from US, UK, over tax fraud scheme
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