Tuesday, January 26, 2021

Are Bankers Mobsters Becomes Question in German Cum-Ex Probe

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JPMorgan, Bank of America and Morgan Stanley declined to comment. Deutsche Boerse is fully cooperating with the authorities, a company spokesman said, declining to comment further.

A spokesman for Cologne prosecutors said each investigation determines whether probing additional offenses besides tax evasion is warranted, depending on the circumstances. He declined to comment on individual cases.

Separately, Peter Biesenbach, the Justice Minister of North-Rhine Westphalia, told reporters on Tuesday that Cologne prosecutors are now conducting 56 probes with a total of about 400 suspects related to Cum-Ex.

The staff devoted to these cases is being doubled from five prosecutors to 10, according to a transcript of his speech. North-Rhine Westphalia is Cologne’s home state.

“The Cologne investigations have now reached a point that prosecutors say that Cum-Ex wasn’t a legal tax-driven trading strategy, but organized white-collar crime of unimaginable magnitude,” the minister said.

Prosecutors like to add crimes like money laundering in complex investigations because they hand them an investigative toolbox that’s out of reach when only tax crimes are involved, said Marco Mansdoerfer, a criminal law professor at Saarbruecken University. It also makes it easier to add more suspects, he said.

Complex Structure

“There’s a clear tendency to use it in white-collar crime probes, though originally it was intended only for mafia-type of action,” Mansdoerfer said. “It’s a tactical move, because you want to investigate more broadly and use these intelligence methods.”

Targeting high finance in a similar vein to drug cartels or the mafia would have few tangible material effects should prosecutors decide to charge banks, since possible fines are mostly based on overall profits made, regardless of the number of offenses involved.

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For employees and managers who are probed individually, on the other hand, a conviction for additional crimes would typically increase prison terms.

Before prosecutors file charges, they often drop the additional crimes again to reduce complexity during trial, said Mansdoerfer. As useful as prosecutors may find it at the investigative stage, it’s easier to try a case under tax crimes alone, according to the professor.

The first trial looking into Cum-Ex started on Sept. 4 in Bonn, where the court is hearing a case against two former traders, who are cooperating. Their indictment only cites aggravated tax evasion as the alleged crime.

Tomorrow, one of the main defendants, Martin Shields, is scheduled to testify. His appearance, slated for two consecutive days, marks a hotly anticipated moment in the Cum-Ex saga, which relied on a complex web of interactions by different financial institutions, many of which have now been caught up in the investigation.

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