The trial lasted more than a year and a half at the Frankfurt Regional Court, and the criminal court led by the presiding judge, Werner Gröschel, dissected the criminal past of an unknown bank over a period of 57 days. This Monday, day 58 of the hearing, the judge pronounced the verdict against the former management team of Maple Bank, once a branch of a Canadian banking group in Frankfurt and deeply involved in the biggest tax scandal in the history of the Federal Republic. Tax damage according to the court: more than 370 million euros. A gigantic sum for the tiny bank, a complicated case, a demanding process.
Now, for the first time, a former bank boss has to go to prison because of these cum-ex transactions at the expense of the state treasury. Wolfgang Schuck, 69, long-time managing director of the bank, which has been insolvent since 2015, was sentenced to four years and four months in prison for tax evasion, with the court taking into account, among other things, his poor health and the long duration of the proceedings as a mitigating sentence. In addition, he should pay a fine of 96,000 euros, and another 2.9 million euros will be confiscated from his assets. Another former CEO has been sentenced to four years and two months in prison plus a fine and will be confiscated with more than €1 million. A third defendant, who once worked at the bank’s trading desk and was jointly responsible for the cum-ex transactions, is to be sentenced to three and a half years in prison for aiding and abetting tax evasion. The verdict is not yet legally binding.
Only the fourth defendant can be happy – about special leniency
Only the fourth defendant can be happy. He had unpacked early on with the investigators and shared his knowledge, incriminated himself and others and repeated his statements in court. The court sentenced him to two years probation. Because he had received such enormous bonuses, almost 5.8 million euros were confiscated as proceeds from the crime. “Your confession was of central importance for the entire process,” said Judge Gröschel in the direction of the accused, “that results in a very special reduction in sentence.”
It is a signal to many of the more than 1,500 people accused of Cum-Ex in Germany: Anyone who, like him, helps the investigators with their knowledge at an early stage can hope for leniency, said Gröschel. Anyone who tries to explain to the last that they knew nothing about it must expect a different outcome. He spent a lot of time on this explanation, because you have to make it clear why someone who took part in an industrially organized tax evasion with damage in the mid three-digit million range is allowed to stay at large in the end. “Enlightenment assistance” is what the judiciary means, and that is crucial when it comes to Cum-Ex.
Even in the first cum-ex criminal trial at the Bonn Regional Court, the two accused ex-bankers only received suspended sentences despite the enormous amount of damage. They, too, had previously given the investigators deep insights. Had explained how it worked when, in the years 2006 to 2011, they had capital gains tax credited or distributed on stock transactions that nobody had previously paid. It was a large-scale confusion at the expense of taxpayers, which is said to have cost German taxpayers more than ten billion euros.
Things will soon continue spectacularly: Freshfields lawyers will appear in court
In the case of Maple Bank, this confusion was considered particularly bold. A total of four cases of tax evasion were charged between 2006 and 2009, in which those involved traded shares in a circle and ripped off the state treasury. The Frankfurt Public Prosecutor’s Office had in December 2019 a total of eight suspects chargedSchuck and another former managing director of the bank were in the meantime in custody and since March 2020 free again on bail. The bank went bankrupt seven years ago because of the tax authorities’ demands for reimbursement. The Maple complex was considered one of the most spectacular cum-ex cases to date simply because of the high amount of damage.
It will stay that way, because in the jury room of the Frankfurt district court there was literally a elephant in the room with the large law firm Freshfields on almost every day of the hearing. Two of their tax lawyers, including the long-time global head of the tax law practice Ulf Johannemann, were originally accused. Your procedure has been severed. They had repeatedly assessed Maple Bank’s cum-ex business models as permissible under tax law. So there will soon be another first time in Frankfurt: The first tax lawyers will come to court because of their cum-ex reports.