A British man accused of defrauding the Danish tax authorities of more than 320 million Danish crowns (approximately £36.6 million) in a bogus trading scheme designed to obtain double tax refunds has been sentenced to six years in prison. .
Danish prosecutors filed preliminary criminal charges in 2021 against Günter Klar, 54, and two other British and three American nationals, accusing them of defrauding tax authorities of more than 1.1 billion crowns.
Klar was extradited from Belgium to Denmark for prosecution in June last year.
The charges relate to a broader so-called “Kanemoto” trading scheme, in which the Danish state says it lost more than 12.7 billion crowns.
The main suspect in the case, another British national named Sanjay Shah, was extradited to Denmark from Dubai in December. Both deny wrongdoing.
In 2021, Danish prosecutors filed preliminary criminal charges against Günter Klar, 54, and two other British and three American nationals, accusing them of defrauding tax authorities of more than 1.1 billion crowns.
Shah, 52, was arrested in Dubai in 2022 at the request of Danish authorities, who accused him of exploiting European tax rules for personal gain through a now-defunct hedge fund.
UAE state media reported that “UAE authorities have extradited to Denmark Sanjay Shah, a British national wanted by the judiciary on charges of tax evasion and money laundering.”
“Mr. Shah was handed over to the Danish security mission in accordance with legal procedures, based on the decision of the Dubai Court of Cassation and the resolution of the Minister of Justice approving the handover.”
After his extradition in December, two Danish police officers were seen escorting the suspect to a gray Volkswagen van that was waiting for him on the runway at Copenhagen’s Kastrup Airport.
Shah, who is suspected of carrying out the scheme between 2012 and 2015, was arrested by Dubai police after Danish authorities requested his extradition to face long-standing fraud charges.
The Danish Customs and Taxation Authority (SKAT) wants to recover £1.44 billion from defendants, including Mr Shah and his hedge fund, for fraudulently claiming tax refunds through so-called ‘Cum-Ex’ transactions.
He has consistently denied wrongdoing.
“Cum-ex” (Latin for “with-without”) schemes flourished after the 2008 financial crisis, and are schemes in which banks, investors and It involved rapid trading of stocks centered around a syndicate of hedge funds. And Belgium.
Cum-Ex trading worked when an allegedly fraudulent network lent stocks of large companies to each other, so tax authorities thought each stock had two owners.
The bank used for the stock transaction will issue a receipt “confirming” that dividend tax was paid on the transaction.
Cum-Ex trading saw the allegedly fraudulent network quickly trade these stocks right before the dividend payment date, allowing them to recoup double their taxes.
Danish Customs and Taxation Authority (SKAT) wants to recover £1.44 billion from multiple defendants including Sanjay Shah (pictured) and his hedge fund
Two Danish police officers were seen escorting him to a gray Volkswagen van that was waiting for him on the runway at Copenhagen’s Kastrup Airport.
The cost of cross-border trade in 10 European countries is estimated to be over €55bn (£47bn).
Mr Shah’s lifestyle on Dubai’s luxurious palm-shaped island in recent years has sparked outrage in Denmark.
While in Dubai, the hedge fund manager ran a center for autistic children, which closed in 2020 after Denmark attempted to extradite him.
He also oversaw Autism Rocks, a UK-based charity that raised funds through concerts and performances.
The trader had previously had his £14.7 million Hyde Park mansion in Denmark repossessed over fraud charges.
In 2022 and early 2023, he was embroiled in a lengthy legal battle over whether he should be extradited from the UAE to Denmark.
The Dubai Court of Appeal initially rejected Denmark’s extradition request in September 2022, but later reversed that decision in December.
This was upheld in April, but no deadline was given for the extradition.
In a separate judgment in September 2022, Mr Shah was ordered to pay £1 billion to the Danish tax authorities as part of civil proceedings in Dubai. His lawyer is also appealing the ruling.