Major Verdict in Denmark’s Battle to Recover Billions
A Manhattan federal jury awarded Denmark’s tax authority, SKAT, $500 million on Monday, marking a significant victory in the country’s effort to reclaim $2.1 billion in tax refunds it says were fraudulently obtained. The case is the first U.S. civil trial related to Denmark’s global pursuit of stolen tax revenue.
Jurors ruled in favor of SKAT in a bellwether trial against four individuals and 17 pension plans they oversaw, determining that they had engaged in fraudulent tax refund claims.
Denmark’s Taxation Minister Jeppe Bruus welcomed the ruling, stating, “I am pleased that there has now been another important decision in the case… it is once again an expression that the Danish Tax Agency’s strategy for civil litigation is the right one.”
Fraud Stemmed from ‘Cum-Ex’ Trading Scheme
The trial revolved around a complex financial strategy known as “cum-ex” trading, which has been at the center of major tax fraud cases across Europe. The scheme exploited loopholes in dividend tax laws, allowing investors to claim multiple refunds on a single tax payment.
British hedge fund trader Sanjay Shah, who was accused of orchestrating the scam, was sentenced in December to 12 years in prison by a Danish court. SKAT alleged that dozens of pension plans and limited liability companies manipulated the tax system between 2012 and 2015 by falsely claiming to own billions of dollars worth of Danish stocks and requesting tax refunds on dividends they never received.
According to court filings, Shah’s company, Solo Capital, took a significant cut of the fraudulent profits.
Legal Battle Continues in Multiple Countries
The five-week trial concluded after jurors deliberated for two days before reaching a verdict. SKAT’s victory in U.S. court strengthens its broader international efforts to recover the stolen funds.
Neil Oxford, a lawyer representing SKAT, called the decision a major milestone in the agency’s global legal campaign, which spans the United States, Denmark, Canada, Dubai, England, Malaysia, the Netherlands, and other jurisdictions.
However, the defense argued that SKAT failed to provide sufficient proof that the pension funds were aware of any fraudulent activity. During closing arguments, defense attorney Sharon McCarthy accused SKAT of “complete and utter negligence” in handling refund claims. She claimed there was “absolutely zero evidence” that the pension plans knew Solo Capital was not purchasing Danish stocks as claimed.
Marc Weinstein, another lawyer for SKAT, countered that the defendants “blew through stop sign after stop sign, red flag after red flag,” insisting that they knowingly participated in the fraudulent scheme.
The ruling could set a precedent for similar cases, as Denmark continues its global pursuit of those involved in the massive tax fraud.
