UK trader on trial on charges of defrauding Denmark in 'cum-ex' case

Anthony Mark Patterson, who is seen as Shah's closest accomplice, was in February sentenced to eight years in prison in Denmark's first criminal cum-ex trial. Patterson, who confessed to helping defraud tax authorities of around 8.4 billion Danish crowns, has been called as a witness in the Shah case, prosecutors have said.

The trial of a British hedge fund trader charged with defrauding Denmark of $1.8 billion began on Monday, in a criminal case that is expected to be significant for the Danish welfare state and tax authorities around the world.

Denmark has charged nine British and U.S. citizens over the so-called 'cum-ex' schemes, which it says cost it more than 12.7 billion Danish crowns ($1.86 billion) between 2012 and 2015. Sanjay Shah, the main suspect in the so-called cum-ex case, denies any wrongdoing, while prosecutors say he fraudulently obtained a dividend tax refund from the Danish treasury.

At the opening of the case, prosecutor Marie Tullin asked the court to confiscate assets worth 7.2 billion Danish crowns, including a long list of real estate. Shah's lawyer Kaare Pihlmann asked the judge to dismiss the case, referring to past comments by the Danish justice minister about his client's guilt.

"Shah is worried about whether he will get a fair trial," Pihlmann said. The Justice Ministry was not immediately able to comment.

"He is innocent," Shah's media and political adviser, Jack Irvine told Reuters on Friday. "The Danes themselves didn't understand their own tax law, that's the problem," he added. The criminal proceedings will primarily act as a deterrent, while the state aims to recoup the money it says it has lost in a separate civil case, which is set to begin later.

"There is a deterrent element if authorities can show that they're not just interested in getting the money back in situations like this, but they're interested in putting people behind bars," said Neil Swift, a lawyer specialising in business crime at Peters & Peters. Shah, founder of London-based hedge fund Solo Capital Partners, was arrested in Dubai in 2022 and extradited to Denmark in December where he is still being held in custody.

The 'cum-ex' schemes, which flourished following the 2008 financial crisis, involved trading shares around a syndicate of banks, investors and hedge funds immediately before the dividend payout date, allowing traders to reclaim double the taxes. Denmark, Germany and Belgium were particularly hard hit, and the practice is considered illegal in most countries.

The Danish state's legal adviser has said it is not possible to assess how much it will be able to retrieve, and has estimated that the costs for legal proceedings between 2017 and 2029 could amount to 4.3 billion crowns. The Danish tax authority has filed civil lawsuits against around 500 companies and individuals in the U.S., Britain, Dubai, Malaysia, Canada and Denmark.

A crackdown has triggered bank raids, criminal proceedings and litigation. Anthony Mark Patterson, who is seen as Shah's closest accomplice, was in February sentenced to eight years in prison in Denmark's first criminal cum-ex trial.

Patterson, who confessed to helping defraud tax authorities of around 8.4 billion Danish crowns, has been called as a witness in the Shah case, prosecutors have said. More than 50 court hearings are scheduled for Shah's case between March 11 and June 2025. 

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