British businessman found guilty in $1.35 billion tax scam case in Denmark

COPENHAGEN, Denmark (CN) — A British businessman was sentenced to 12 years in prison Thursday at Glostrup Court, near the capital of Copenhagen, after he was convicted of swindling Denmark for an unprecedented 9 billion Danish kroner ($1.35 billion) in a trading scheme.

Under the sentence, 7 billion kroner ($1 billion) worth of Shah’s assets, around 80% of the total he’s accused of pocketing, will be confiscated. The sentence is Denmark’s harshest ever for a financial crime.

“The Magistrate’s Court has found it proven that the defendant Sanjay Shah has had a central and controlled role in connection with the construction and operation,” said the judge.

The court based the sentence on the length, scope and character of the cum-ex trading scheme Shah was leading, and the billions he stole.

The cum-ex scheme Shah was convicted of using is an aggressive form of dividend arbitrage or stripping, a method traders employ to hedge the difference in value between shares cum- (with) and ex- (without) dividends. The scheme has gained notoriety in Germany and other EU-countries over the last decade.

“We are of course very satisfied with the verdict today,” said prosecutor Marie Tullin to Danish public broadcaster TV2. “It is also a milestone in this dividend tax complex, which we have worked hard on for many years,” she said.

The court found that Shah had frauded the Danish treasury between 2012 and 2015 by securing dividend tax refunds from stocks that were never purchased.

“When you have been a defender for the man for almost eight years and then face a historically harsh sentence of 12 years in prison, it is of course disappointment,” said Kåre Pihlman, Shah’s defense attorney, to TV2.

Shah, who wore a red Santa hat in court, immediately appealed. He had pleaded not guilty to all charges, arguing that he used a loophole in the Danish tax law to withdraw money from the state.

Before his conviction, Shah told reporters he would see them at the appeal in Landsretten, the country’s second-tier court system.

The trial started in March and was set to conclude within 15 months. Proceedings wrapped early since Shah did not challenge the prosecutor’s characterization of how he executed the scheme.

Tax authorities first noticed issues in 2015. When Danish police suspected Shah of being the mastermind behind the cum-ex trading scheme, a two-year battle to extradite the businessman from his residence in Dubai, United Arab Emirates, ended in 2023 when he landed in Copenhagen.

Briton Anthony Mark Patterson, a previous right-hand man of Shah, received an 8-year prison sentence in March for bilking the Danish state of 8.4 billion kroner ($1.18 billion). He admitted the fraud and told authorities that companies Shah led, including one where he worked, deliberately committed the scheme.

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