A former Luxembourg fund manager has been sentenced to three years and nine months in prison for his role in the Cum-Ex tax fraud scandal.
Günter G., former managing director of the now-liquidated Sheridan funds operated by Bank J. Safra Sarasin, was found guilty by a court in the German city of Bonn, according to a report in the business newspaper Handelsblatt.
The fund sought to generate profits by exploiting a tax loophole that allowed multiple parties to claim refunds for dividend taxes that had been paid only once.
Prosecutors said G. and his associates tried to claim €462 million in tax refunds from German authorities. The court heard that most of those claims failed after a 2012 legal reform closed the loophole, leaving investors – including many celebrity and high-profile clients – with heavy losses.
Because the attempt was largely unsuccessful, Günter G. was charged with attempted tax evasion, although he denied the charges. The verdict against Günter G., whose lawyers had argued should be acquitted, is not yet final, Handelsblatt reported.
Two well-known lawyers, Hanno Berger and Kai-Uwe Steck, were involved in the Sheridan transactions. Berger is currently serving an eight-year prison sentence in Germany following extradition from Switzerland. Steck received a suspended sentence after co-operating as a key witness.
Countries across Europe lost billions of euros through the withholding tax refund fraud known as CumEx, in deals which were designed to trick governments into refunding withholding taxes on share dividends multiple times.
The CumEx fraud involved a network of traders who lent each other shares in companies just before a dividend payment so that each of them could fraudulently benefit from refunds on withholding taxes.
The exact amount lost to the Luxembourg state through CumEx fraud is unknown, then-Finance Minister Yuriko Backes said back in 2022.
(This article was originally published by the Luxemburger Wort. Machine translated, with editing and adaptation by Kabir Agarwal)