May 22, 2018 / 2:00 PM / a month ago

German prosecutors file first charges in finance market tax scam

FRANKFURT (Reuters) - German prosecutors said on Tuesday that they had charged the first suspects in a widespread and long-running financial market tax scam that has cost taxpayers billions of euros.

The 948-page indictment filed in Wiesbaden named the 67-year-old German lawyer Hanno Berger as one of the six charged, the court confirmed separately.

Berger and the others will have until the end of August to respond to the accusations before the court decides whether to take the case to trial. The defendants could be jailed for up to 10 years. Berger declined to comment on the case.

For years, government officials and prosecutors have been investigating cases across Germany of so-called dividend stripping, or “cum-ex” transactions.

The scheme involved buying a stock just before it loses rights to a dividend, then selling it, and illegally claiming a tax credit on both purchase and sale.

The case disclosed on Tuesday is expected to be the first of many in the months ahead.

In this particular case, the defendants are accused of conducting 61 sales of shares in companies listed on Germany’s blue-chip DAX index between 2006 and 2008, around the dividend payout days.

The trades, worth 15.8 billion euros ($18.6 billion), generated tax credit certificates that allowed the defendants to receive 106 million euros in illegal reimbursements, prosecutors said.

Neither the prosecutors nor the Wiesbaden court identified the other five defendants by name, but the prosecutors said they included investment bankers from New Zealand and Britain.

All five worked for an unnamed large German bank based in Munich and London, the prosecutors said.

Reporting by Hans Seidenstuecker and Tom Sims; Additional reporting by John O'Donnell; Editing by Kevin Liffey

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