An ex-managing director at M.M. Warburg & Co. was sentenced to three-and-a-half years in prison for his role in illegal Cum-Ex deals that cost Germany’s taxpayers about 109 million euros ($124 million).
The Bonn Regional Court convicted Detlef M., of Warburg Invest, for his role in setting up the transaction. Prosecutors had initially sought seven years, while his defense asked the judges for a suspended prison term.
The 63-year-old has been on trial since September following his former colleague Christian S. who was sentenced to 5 1/2 years in prison in June. After fighting the allegations for months, Detlef M. admitted that he was aware that the transactions were illegal.
In Cum-Ex deals, investors and the people who orchestrated the trades used short sales to earn duplicate refunds on dividend tax on German shares. The practice ended in Germany in 2012 after rules were revised, but the schemes may have cost the nation more than 10 billion euros. Germany’s top criminal court last year declared the deals illegal and criminal, calling them a “ blatant money grab.”
When Germany’s Finance Ministry tried to clamp down on how Cum-Ex deals were struck with new rules in 2009, he understood that the practice was illicit. But since the bank’s leadership wanted to continue, he was concerned that if he stopped would spell the end of his career, he told judges last month.
“I closed my eyes and continued the project,” said Detlef M. “I deeply regret to have brought about this immense tax loss.”
More stories like this are available on bloomberg.com
Ex-Warburg banker handed prison sentence for illegal tax deals
Image: Bloomberg
An ex-managing director at M.M. Warburg & Co. was sentenced to three-and-a-half years in prison for his role in illegal Cum-Ex deals that cost Germany’s taxpayers about 109 million euros ($124 million).
The Bonn Regional Court convicted Detlef M., of Warburg Invest, for his role in setting up the transaction. Prosecutors had initially sought seven years, while his defense asked the judges for a suspended prison term.
The 63-year-old has been on trial since September following his former colleague Christian S. who was sentenced to 5 1/2 years in prison in June. After fighting the allegations for months, Detlef M. admitted that he was aware that the transactions were illegal.
In Cum-Ex deals, investors and the people who orchestrated the trades used short sales to earn duplicate refunds on dividend tax on German shares. The practice ended in Germany in 2012 after rules were revised, but the schemes may have cost the nation more than 10 billion euros. Germany’s top criminal court last year declared the deals illegal and criminal, calling them a “ blatant money grab.”
When Germany’s Finance Ministry tried to clamp down on how Cum-Ex deals were struck with new rules in 2009, he understood that the practice was illicit. But since the bank’s leadership wanted to continue, he was concerned that if he stopped would spell the end of his career, he told judges last month.
“I closed my eyes and continued the project,” said Detlef M. “I deeply regret to have brought about this immense tax loss.”
More stories like this are available on bloomberg.com
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