Tax evasion: Several years in prison in the first Munich cum-ex trial

In the first Munich Cum-Ex trial, the court sentenced the two defendants K. and U. to prison terms of five years and three months. Six months of this are already considered to have been carried out due to procedural delays, as the presiding judge Andrea Wagner said. The two men, aged 71 and 63, are guilty of tax evasion with a total loss of more than 343 million euros. Together with other people, they reached into the state treasury and “shamelessly helped themselves” to an extent that was unparalleled. The verdict is not yet final.

The sentence lies between the prosecutor’s proposals, which had asked for five years and ten months each, and the defense attorney’s proposal of four years each.

In addition to their confession and willingness to cooperate, the court gave the two men credit for, among other things, the fact that they had no experience with the penal system and were therefore particularly sensitive to detention. Likewise, the attempt to make amends for damages and that they obviously “deeply regret” their actions.

Confessions through tears

U. and K. had already apologized on the first day of the trial and, at times in tears, confessed to having been involved as fund managers 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.

The defense emphasized in its plea that the world was different back then. Nobody thought of the public prosecutor’s office when doing business, but rather of a game of hare and hedgehog with the legislature. “There was a lot of stupidity and naivety involved,” Us defense attorney said of his client. However, the court was not prepared to see the two as just followers in the system. Rather, Wagner spoke of an “actually very significant contribution to the crime.”

The businesses now accused were by no means the only ones following the Cum-Ex scam: There are various other proceedings. 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.