High-Profile Tax Fraud Case Appeals: Former Freshfields Partner in Legal Battle

Ulf Johannemann, former global tax head at Freshfields, was sentenced to three and a half years in jail for his involvement in a massive tax fraud case. Both German prosecutors and defence lawyers are appealing the sentence. The court found Johannemann assisted in a scheme that cost state coffers approximately 10 billion euros.

The court sentence of a former partner at law firm Freshfields for his alleged role in a giant tax fraud case is being appealed by German prosecutors and defence lawyers, prosecutors told Reuters, potentially delaying any possible jail time.

Ulf Johannemann, a former global tax head at law firm Freshfields, was sentenced by a Frankfurt court in January to three and a half years in jail. It was a high-profile case in a sprawling fraud that has ensnared scores of banks and hundreds of individuals. The court found Johannemann assisted now-defunct Maple Bank in so-called "cum-ex" trading. Such schemes were rife more than a decade ago and are estimated to have stripped state coffers of around 10 billion euros ($10.81 billion) in total.

In early June, the court issued its written ruling, and now both parties have a month to formally submit their grounds for their planned appeals. Prosecutors would not elaborate why they are appealing, but it could mean they find the court's sentence too light. They had originally demanded five and a half years of jail.

Lawyers for Johannemann didn't respond to requests for comment. They had originally argued for a suspended sentence. Johannemann, who has expressed regret, remains free during the appeals process. He was briefly held in custody upon his arrest in 2019, being deemed a flight risk, but he then posted a 4 million euro deposit for his release.

"The appeal proceedings will certainly take some time," Frankfurt prosecutors said in a statement to Reuters. Prosecutors had alleged Johannemann's work for Maple Bank helped result in some 390 million euros in lost tax. The sentencing judge said he had the impression Johannemann regretted being caught but didn't regret doing something wrong.

Using such dividend stripping schemes, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends. The loophole that allowed the trading to thrive between 2005 and 2012 is now closed, but a lengthy investigation has taken on vast dimensions as courts and officials try to hold wrongdoers to account and claw back lost revenue from government coffers.

London-headquartered Freshfields Bruckhaus Deringer did not immediately respond to a request for comment but has previously declined comment, noting it was not a party to the case. ($1 = 0.9252 euros)

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