Financial crime: Confessions and tears in the first Munich Cum-Ex trial

Two fund managers accused of cum-ex transactions that caused damage of 343 million euros confessed in tears and apologized. K. and his co-accused colleague U. essentially admitted the charges in the first Munich Cum-Ex trial, which began today. You are now likely to face several years in prison.

The defense admitted in an opening statement that both men had made big mistakes in their crimes 14 to 16 years ago. The lawyers appealed for leniency that they were now faced with financial and private shambles. K. recited his confession that morning, sometimes in a voice choked with tears. Today he asks himself why he took part back then; after all, he was already financially secure and had a happy family, said the father and grandfather of several years.

“A bit like Monopoly”

Greed, excessive ambition and arrogance were probably the decisive factors, K. speculated about his motivation at the time. He believed he could master a game and beat the system. Everything felt “a bit like Monopoly,” he said. But for him it now means: Go straight to prison, don’t go, he said, alluding to a well-known card in the board game. But this is the just punishment for his behavior.

The presiding judge Andrea Wagner had previously reported on a conversation between herself, the public prosecutor and the defense. As a result, even with full confessions and taking into account the age of the two defendants, prison sentences of several years on the order of five to six years are likely – also in view of the high level of damage. However, the defense emphasized that more than 200 million euros had already flowed back to the tax authorities and the remaining damage could also be claimed back.

“Closed your eyes and looked away”

The co-accused U.’s voice also broke during his confession when he remembered how his now deceased father, a former police officer, had once asked him whether the business was legal. He should have looked into the issues more intensively, but he “closed his eyes and looked away,” he said. However, in their confessions, both defendants painted the picture of not having been at the very forefront of the activities themselves.

Specifically, the public prosecutor’s office accuses the two men of being involved in a complex network through which hundreds of millions of shares worth tens of billions were traded in 2009 and 2010. The so-called cum-ex method was used to get the tax authorities to refund capital gains tax that had not previously been paid. The name Cum-Ex comes from the fact that the shares were moved back and forth around the dividend record date with (“cum”) and without (“ex”) dividend entitlement.

Millions for the defendants

In the Munich case, according to the indictment, short sales via foreign custodian banks were used for this purpose. According to the indictment, the two men each received around 16 million euros for their contribution to the crime. The defense speaks of a lower sum. K. spoke of about half.

The businesses now being accused are by no means the only ones. There are various other procedures. In total, the state is said to have been cheated out of a double-digit billion sum through the scam. In 2021, the Federal Court of Justice decided that cum-ex transactions should be viewed as tax evasion. The first convictions have already been made. The investigation and prosecution are likely to take years. Further charges are also expected in Munich.