Two British former bankers appeared before a court in Germany on Wednesday in the first criminal trial of an enormous case of tax fraud that deprived the German treasury of at least 7 billion euros between 2006 and 2012.
Martin Shields, 41, and Nicholas Diable, 38, face 33 charges of tax fraud totalling more than 447 million euros of income that they failed to declare to the German treasury.
The two former employees of HypoVereinsbank (HVB), and then for Ballance Capital, an investment fund with offices in London, the Cayman Islands, Gibraltar and the British Virgin Islands could be sentenced to up to ten years in prison if found guilty by the court in Bonn.
The fraud consisted of buying and selling shares shortly before the day of the collection of dividends, so quickly that the tax administration could not identify the true owner, reports the Guardian. The manipulation, which needed the agreement of several investors, allowed the conspirators to claim several tax refunds on the dividends of the same benefits.
The scam, which was committed throughout Europe, cost Germany at least 7.2 billion euros until a legislative change in 2012 made such manipulation impossible.
Speaking to the press, a spokesman for the German Finance Ministry said the administration has “already claimed reimbursement of 2.4 billion euros,” after identifying a total of 499 suspected cases involving a volume of 5.5 billion euros”, all made before the amendment of the law.
One hundred people have been charged in connection with the case in Germany, including stockbrokers, bankers, lawyers and tax advisors, while prosecutors in Cologne, Frankfurt and Munich continue their investigation, according to the Frankfurter Allgemeine Zeitung newspaper.
Meanwhile, German lawyer Hanno Berger, considered the brain behind the operations, is awaiting trial. There will be about thirty days of hearing in the Bonn trial between now and January 2020. Representatives from a bank and four investment funds will appear at the hearings.