Major participant in German “cum-ex” tax fraud arrested in Switzerland

Authors: Tom Sims and Brenna Hughes Neghevi

FRANKFURT (Reuters)-German and Swiss authorities said on Friday that Hanno Berger was accused of playing a key role in years of tax fraud and that he has been arrested in exile in Switzerland.

This scandal, known as “cum-ex”, was the largest fraud case in Germany after the war and involved a stock trading plan that the authorities said caused taxpayers to lose billions of euros.

According to the prosecutors, the plan was promoted by Berger, a tax consultant who was a German tax inspector, and others. Berger is the defendant in a case in Wiesbaden near Frankfurt.

Berger, who is a lawyer and helps represent himself, has consistently denied any wrongdoing in his conversations with Reuters and stated that his actions are within the scope of the law.

A prosecutor’s spokesperson said on Friday that the Swiss authorities notified the Frankfurt prosecutor of the arrest.

The Swiss Ministry of Justice stated that Berger was arrested in the Swiss canton of Graubunden on July 7 in accordance with Germany’s extradition request.

His extradition is now awaiting the decision of the Swiss Ministry of Justice, which can be further appealed to the Swiss Federal Criminal Court.

The Federal Office of Justice said in an email statement: “During his interrogation, this person announced that he opposed extradition to Germany.”

Berger’s lawyer Kai Schaffelhuber said his client was innocent and he did not believe that extradition would be successful. “Switzerland is not stupid,” he said.

Schaffelhuber said that, considering his high blood pressure, bad knees and 70 years old, Berger did a good job in this situation.

False tax refund

The plan involves a consortium of banks, investors, and hedge funds quickly trading the stocks of large companies to give the impression of countless owners, everyone is entitled to a false tax refund.

This practice flourished between 2005 and 2012, which included the years after the financial crisis and the period when banks were rescued by the state. The loopholes that facilitated the transaction were subsequently plugged.

Cum-ex tax fraud is the subject of multiple investigations across Germany as the government tries to recover billions of euros allegedly stolen from the state.

Last year, in the first criminal conviction involving the scheme, two British bankers were sentenced to probation and one was fined 14 million euros.

The judge in the case, Roland Zickler, called it “a collective case of theft of the state treasury.”