Tax fraud: CUM-EX crown witness does not have to go to prison

One of the leading actors in the billion-dollar CUM-Ex Tax fraud, the lawyer Kai-Uwe Steck, escapes a prison sentence, but has to pay millions. The Bonn district court announced a probation penalty of one year and ten months.

According to the judgment, the 53-year-old was guilty from 2007 to 2011 in five cases of particularly severe tax evasion, in which tax damage of 428 million euros was incurred. The court ordered the confiscation of 23.6 million euros, of which Steck has already paid eleven million.

The court justified the relatively mild judgment with Steck’s role as a key witness, which made it significantly contributing to dealing with Cum-Ex. His former colleague and mentor Hanno Berger had been sentenced to a prison for eight years by the Bonn district court in 2022.

At CUM-EX, financial actors postponed stocks with (“cum”) and without (“ex”) dividend entitlement back and forth in order to receive unpaid taxes. A “perverted system”, as the Bonn court called it. The high phase of this fraud was from 2006 to 2011. According to estimates, the tax authorities lost a double-digit billion-euro amount.

The public prosecutor had pleaded for a prison sentence of three years and eight months at Steck, but the defense had called for a procedural setting.

Steck’s defender Gerhard Strate was relieved. “We are in principle satisfied with the judgment.” The judgment with its suspended sentence was quite far from the public prosecutor’s request. When asked whether he would appeal and aim for the next instance, he said: “We tend to have peace in this matter.”

Steck was formerly a law firm of the Cum-Ex Architect Berger. While Berger was convinced of the legality of his actions until the very end, Steck was poured, cooperated with the public prosecutor and acted as a key witness.

He explained comprehensively-both among the police and the witnesses of various legal proceedings that were directed against other Cum-Ex actors. Even on television, he was repentant in a documentary.

No doubt about the deeds

The procedure against him was unusual, after all, there was essentially no doubt of the allegations against the former top attorney – the allegations were largely based on statements from Steck himself, he granted the allegations. It was controversial whether the indictment should have occurred at all.

Steck had claimed that the then prosecutor Anne Brorhilker promised him to apply for an employment of the procedure. Brorhilker had denied that. Steck’s lawyer, on the other hand, had warned of a kind of precedent before the verdict: if his client would punish hard if the other criminals would prevent it from making a pure table and working with the authorities. According to the clearly recognizable punishment, there should not be such a negative signal effect in the judgment.

The content of the one -hour verdict was divided into two. In the first part, the presiding judge Sebastian Hausen outlined the path of an intelligent and unscrupulous criminal. “He was a central figure,” said the judge about the role of the defendant in the largest tax scandal in the Federal Republic.

“The defendant contributed to the fact that CUM-EX shops were carried out and lifted on new level,” said Hausen. If the perpetrators had had to wait a year beforehand that they got the crime, the money was “in the account within a few days”.

Steck acted as a consultant and system optimizer at an interface between banks, fund companies, dealers and investors. “The money collected was locked by the systems to generate an illegal tax advantage,” said the judge. Steck was clear early on that the CUM-EX shops were illegal.

The second part of the judgment of the judgment was about Steck’s further role – ultimately as a story of Saul, who was converted to Paul. After investigators had searched his home in 2014, the judge, according to the judge, initially hidden in an argumentative “Phalanx” by Kompagnon Berger, who was legal, according to Cum-Ex.

In 2016, however, Steck became key witness. “He broke out of the Phalanx and began an intensive cooperation with investigative authorities,” said Richter Hausen. “The defendant’s statements before the investigative authorities were of particular importance.” Steck gave insights into the “machine room of the Cum-Exhandel”: “He significantly pushed the investigation forward.”

In addition, Steck had made other participants unpacked. The defendant was credible in his statements and contributed to the fact that at least 660 million euros had been repaid by banks and other actors to the German state as part of the CUM-EX processing, the judge said. Defender Strate said after the judgment that he was glad that the court had particularly emphasized his client’s educational work.

First judgment in the new Cum-Ex Court building

The judgment was spoken in the Siegburg branch of the Bonn district court-in a new building that was rebuilt due to the forecast mass of CUM-Ex processes for 43 million euros. But the expected flood of process has so far failed – the modern building has so far been little used.