A hedge fund trader can be extradited from the UK to Denmark to stand trial over allegations linked to the sprawling “cum-ex” dividend scandal, a London court has ruled.
Westminster magistrates’ court on Tuesday ordered that Anthony Mark Patterson, 51, of Rickmansworth, Hertfordshire, could be extradited to Denmark to face two charges concerning an allegedly fraudulent £1bn tax reclaim scheme perpetrated upon Denmark’s tax agency, Skat.
The Danish government’s push for Patterson’s extradition is part of its wider effort to tackle the “cum-ex” dividend tax fraud and identify those it says are responsible for defrauding the country of more than £1.5bn.
Denmark, Germany, Italy and France are among the European countries hardest hit by the “cum-ex” scandal, in which governments were duped into refunding billions of euros of dividend taxes that had never been paid.
Last month, it emerged that public prosecutors in Cologne were investigating 1,500 people as part of a broader inquiry into the scandal which takes its “cum-ex” name from the Latin phrase meaning “with without”, referring to the disappearing nature of the dividend payments.
Patterson is accused of being part of an alleged fraud which left Skat with losses of about £1bn through false applications for refunds of Danish dividend tax.
The case stems from a Danish investigation into a London-based hedge fund, Solo Capital Partners and whether it deceived tax authorities into repaying a tax on dividends between 2012 and 2015.
Patterson worked for Solo Capital Partners, which was founded by Sanjay Shah, a British national now living in Dubai and also the subject of an extradition request by Denmark to stand trial over the alleged fraud.
A Dubai court refused to extradite Shah to Denmark earlier this month but Danish authorities are appealing against the decision at Dubai’s Court of Cassation. Both Shah and Patterson, who moved from the UK to Dubai in 2014 to work with Shah, have denied wrongdoing.
On Tuesday, district judge Timothy Godfrey ruled that Patterson’s extradition from Britain could go ahead and would not breach his human rights or be disproportionate. The judge said that the losses from the alleged fraud occurred overwhelmingly in Denmark which was a “weighty factor in the balance in favour of extradition”. Patterson, whose legal team declined to comment outside court, has a week to lodge an appeal.
Denmark’s tax authority has also brought a £1.5bn civil lawsuit in London’s High Court to pursue more than 100 financial institutions, together with Shah and Patterson, for lost tax payments which it alleges represent the proceeds of unlawful reclaiming of tax between 2012 and 2015.
The civil lawsuit, which was issued in 2018, is being vigorously defended and is so complex that it has been split into separate linked trials — the first of which is due to start in 2023.