British Indian hedge fund trader jailed in Denmark for tax fraud

A British hedge fund trader of Indian heritage has been sentenced to 12 years in prison by authorities in Denmark after being found guilty of a tax fraud amounting to over GBP 1 billion.

Sanjay Shah, 54, was handed the maximum prison sentence for an economic crime by a district court in Glostrup this week. The Danish prosecution said in a statement that the court found it proven that Shah was the mastermind behind a complex setup in which 190 American pension companies and 24 Malaysian companies entered into agreements to purchase Danish listed shares at times when the shares were traded with the right to dividends.

“The verdict is a milestone in the criminal justice settlement following the dividend tax cases, as the convicted person was the main instigator of a fraud against the Danish state of historic proportions,” said Marie Tullin, special prosecutor at State Attorney for Serious Crime (SSK).

“It is therefore with satisfaction that I can now state that the court has imposed a sentence that reflects the extremely serious and extensive nature of the case,” she said.

In addition to the prison sentence, the court confiscated a total of approximately 7.2 billion kroner (USD 1bn), corresponding to the economic gain of the convicted person. Among other things, deposits in accounts in foreign banks, shares and bonds, as well as a number of properties or shares thereof belonging to the convicted person, his companies or his wife were confiscated.

“The fraud has caused a major loss for the Danish state, and it is therefore of crucial importance that the court today has confiscated an amount that corresponds to the convicted person’s profits from the fraud,” says Dennis Bæckmann, special prosecutor, National Unit for Serious Crime (NSK).

Shah, who has denied wrongdoing, was also expelled from Denmark permanently, and he was denied the right to participate in the management of a business in Denmark or abroad without being personally and unlimitedly liable for the company’s obligations.

He has lodged an appeal against the Glostrup district court’s verdict in the High Court. According to Danish Prosecution Service (AnklageMyndigheden), the British national was convicted of committing fraud of a “particularly serious nature for 9,025,205,871 kroner (GBP 1bn) and attempted fraud for an additional 553,346,302 kroner during a period from 2012 to 2015”.

Based on the transactions, the court heard that Shah’s British companies issued so-called dividend notes as documentation that the American and Malaysian companies had received Danish share dividends and thus paid Danish dividend tax. With reference to double taxation agreements between Denmark, the US and Malaysia, the companies then applied for a refund of Danish dividend tax.

“During the period, the companies submitted a total of 3,399 applications for refund to Danish Tax Agency (then SKAT), which paid out 9,025,205,871 kroner,” it stated.

Shah, who appeared in court wearing a red Christmas hat, argued that he used a legal loophole.

“We do believe that there is a fair chance that the high court might reach a different conclusion, and obviously we’re also hoping for a more lenient judgment,” Shah’s lawyer Kaare Pihlmann told BBC.

Before his arrest in 2022, Shah had been living in Dubai and extradited from the United Arab Emirates to Denmark in December last year.