White Collar Crime: Top European Deutsche Bank Raided For 2nd Time By Agents In Tax Probe

White Collar Crime: Top European Deutsche Bank Raided For 2nd Time By Agents In Tax Probe

Deutsche Bank

Deutsche Bank headquarters, Frankfurt, Germany, May 18, 2020. (AP Photo/Michael Probst)

More than 114 German officers raided Deutsche Bank headquarters in Frankfurt, Germany, on Oct. 18, along with the homes of 10 suspects including former co-CEO Juergen Fitschen, as part of an ongoing tax fraud investigation that started in 2017.

One of Europe’s biggest tax scandals, the investigation involves controversial Cum-Ex transactions. Some of the world’s most powerful financial firms have been implicated in the misappropriation of billions of euros of taxpayer money

One of the top 10 European banks by assets, Deutsche Bank is dual-listed on the Frankfurt and New York stock exchanges.

Bank of America’s Merrill Lynch premises were raided in March as part of the investigation. Morgan Stanley’s offices were searched in May and JPMorgan Chase & Co. in August, Bloomberg reported.

Frankfurt prosecutors raided one of Deutsche Bank’s offices in 2017.

Cum-Ex is named after the Latin terms cum/ex, meaning with/without, and refers to vanishing dividend payments. The fraud involves share deals executed before and after a stock’s dividend payment that duped governments to reimburse taxes that were never paid in the first place, Financial Times reported. 

Cum-Ex transactions took advantage of a now-defunct method of taxing dividends, which was abused to get multiple refunds through a combination of short sales and other transactions, because stocks were sold with and delivered without a dividend payment, according to Bloomberg. The practice ended in 2012 when Germany revised its rules, but Cum-Ex may have cost European taxpayers more than 10 billion euros ($9.77 billion USD), lawmakers estimated.

German prosecutors are investigating 1,500 people including more than 70 current and former Deutsche Bank employees and former executives.

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Between 2008 and 2011, Deutsche held a 5-percent stake in Luxembourg Financial Group Holding, the owner of one of the Cum-Ex focused investment funds that was also an investment banking client of Deutsche, FT reported.

Several Twitter users questioned why this was news. For example, CASH @fredric02 tweeted, “not really a story this bank is raided more than Hells Angels”.

“(O)f course they were raided again on tax fraud, aka money laundering” @aelizabethI tweeted.