Hedge fund trader accused of fraud is extradited to Denmark

A British hedge fund trader accused of defrauding Danish taxpayers of $1.3 billion has been extradited to Denmark from the United Arab Emirates, where he had lived for more than a decade.

The trader, Sanjay Shah, was taken into custody on Wednesday morning after arriving in Copenhagen and is expected to appear in court for a bail hearing on Thursday.

Danish authorities have been pursuing Mr. Shah since they learned that he and colleagues at Solo Capital in London had found a way to siphon money from the national version of the Internal Revenue Service starting in 2012. The method involved a complicated, carefully choreographed trading of tax refunds on stock dividends. Mr. Shah has long maintained his innocence.

These so-called cum-ex transactions had been used by other traders to drain fortunes from other countries, in what one academic called “the biggest tax theft in the history of Europe.” The toll has become clear in an ongoing reckoning of arrests and trials on the continent. Germany had about $30 billion taken from it, France lost about $17 billion, and smaller amounts were taken from Poland, Norway, Austria, Italy and other countries.

These countries did little to warn others about cum-ex trade. Denmark was one of the last countries affected and has tried for years to persuade the UAE and negotiate Mr Shah’s extradition.

“The dividend case is important for Denmark, and it is one of the largest and most serious criminal fraud cases,” said Peter Hummelgaard, the country’s justice minister. “It is our public money, our welfare state and our trust-based society that are at stake.”

Mr. Shah has said he was merely exploiting a loophole, one that lawyers say was entirely legitimate. His publicist, Jack Irvine, said that Mr. Shah, without admitting guilt, made an offer to settle the case years ago but was rejected outright.

“Mr. It appears that Shah has been found guilty by the Danish government, legal authorities and media prior to trial,” Irvine wrote in a statement. “We must ask ourselves: can he possibly receive a fair trial?”

Mr Shah moved to Dubai in 2009 and said he fell in love with the city. For a time, he lived in a 10,000-square-foot villa with beach access and a $1.3 million yacht.

As Danish prosecutors painted him as a national villain, authorities in Britain, the UAE and Germany began freezing his assets, and Mr. Shah was eventually forced to put his house up for sale, Mr. Irvine said. For years he did not travel for fear of being arrested.

Under pressure from Danish investigators, Mr Shah was arrested in the UAE in May 2022. It took months for the countries to sign an extradition deal so that Mr. Shah could be sent to Denmark to stand trial.

The case will be one of many in the ongoing cum-ex aftermath. Danish authorities have filed a lawsuit in London against dozens of financial institutions in an attempt to recover about $1.7 billion in lost tax revenue.

And in Germany, more than 1,000 lawyers and financiers are under investigation, and several have already been convicted and fined for similar offenses. In May, former tax inspector Hanno Berger, the suspected mastermind behind the cum-ex transactions in Germany, was sentenced to eight years in prison. He had been extradited from Sweden, where he had lived since 2012.