Cum-Ex Tax Fraud: Convicted Trader Ordered to Pay Additional 11 Million Euros
Initial Conviction and Asset Forfeiture
In 2020, the Bonn Regional Court convicted a former stock trader in the Cum-Ex tax fraud scandal. The court sentenced him to 22 months of probation and ordered the confiscation of 14 million euros. The British trader initially paid 3 million euros, but a dispute arose concerning the remaining balance.
Disputed Payment from Warburg Bank
The trader argued that a payment made by Warburg Bank, which was involved in the Cum-Ex transactions, should be deducted from the amount he owed to the state. However, the Cologne Higher Regional Court rejected this claim, ruling that the bank’s payment did not have the effect of extinguishing the trader’s liability.
Installment Payment Plan
The trader has since indicated his willingness to pay the remaining 11 million euros in installments. "The convicted individual is subject to enforcement measures," stated a spokesperson for the Bonn Public Prosecutor’s Office.
Cum-Ex Tax Fraud: A Complex Scheme
In Cum-Ex transactions, financial actors rapidly traded stocks with ("cum") and without ("ex") dividend entitlements. This allowed them to claim tax refunds that had not been paid, costing the German state an estimated sum in the tens of billions of euros. The peak of Cum-Ex activity occurred between 2006 and 2011.
Landmark Ruling and Ongoing Investigations
The case against the British trader and another accomplice reached the Federal Court of Justice, which ruled in 2021 that Cum-Ex constituted a criminal offense. This landmark ruling paved the way for increased investigations into the scandal.
Currently, the Cologne Public Prosecutor’s Office, which plays a pivotal role in Cum-Ex investigations, is handling approximately 130 cases involving around 1,700 suspects.
Voluntary Cooperation and Sentencing
The trader convicted in 2020 expressed remorse and provided insider information to authorities. In contrast, other Cum-Ex players have not cooperated with investigations.
In 2023, the Bonn Regional Court sentenced tax lawyer Hanno Berger to eight years in prison for his involvement in Cum-Ex fraud. Berger, considered a key architect of the scheme, also received a separate prison sentence from the Wiesbaden Regional Court for other Cum-Ex offenses.
