Denmark begins court trial against Sanjay Shah in fraud case

The trial of British hedge fund trader Sanjay Shah charged with defrauding Denmark of $1.8bn began on Monday, in a criminal case that will be closely watched by tax authorities around the world.

Denmark has charged nine British and US citizens over so-called ‘cum-ex’ schemes, which it says cost it more than DKK12.7bn ($1.86bn) between 2012 and 2015.

Sanjay Shah denies wrong-doing

Shah, the main suspect in the case, denies any wrongdoing, while prosecutors say he fraudulently obtained a dividend tax refund from the Danish treasury via trading schemes that flourished following the 2008 financial crisis.

At the opening of the case, prosecutor Marie Tullin asked the court to confiscate assets belonging to Sanjay Shah worth DKK7.2bn, including a long list of real estate, mostly in the UK.

Shah, dressed in a black sweatshirt, black trousers, and yellow Adidas sneakers, will not testify on Monday, as Tullin said she would use the first day in court to go through some of the 300,000 legal documents in the case.

More than 50 court hearings are scheduled in the case until June 2025. Shah is charged under an article in the Danish criminal act that could carry up to 12 years in prison.

Shah’s lawyer Kaare Pihlmann told the court that his client was worried he would not get a fair trial due to past comments by the Danish justice minister implying his guilt.

The judge in the Copenhagen city court denied a request by Pihlmann to dismiss the case.

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.

What is the ‘cum-ex’ scheme?

The ‘cum-ex’ schemes 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.

“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.

Denmark, Germany and Belgium were particularly hard hit, and the practice is considered illegal in most countries.

“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.

The state aims to recoup the money it says it lost in a separate civil case, which is set to begin later.

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.