I busted an enormous tax fraud – and so they sued me

“We'd meet in 20-foot limousines at airports, and take them to places like the Atlantis Hotel in Dubai or the Singapore Grand Prix. The bars would cost hundreds of pennies.”

In 2013, Jace Bains was an bold younger lawyer having fun with the excessive life that got here with working for a extremely worthwhile City hedge fund.

Today, he’s unemployed and has misplaced most of his wealth, having spent years preventing authorized battles and making an attempt to clear his title from a serious tax rip-off.

The irony, he says, is that he was the primary to reveal the rip-off – solely to search out himself one of many targets of a £1.4 billion lawsuit.

He is pondering after a month The matter is closed, It culminated in eight years of authorized arguments and one of many highest-value civil instances ever heard in Britain.

The Danish tax authority was left licking its wounds after failing to determine that a big group of defendants, together with Mr Bains, was answerable for the massive losses it suffered.

It all began in 2009, when a banker named Sanjay Shah based a London-based hedge fund referred to as Solo Capital. It additionally had places of work in Dubai. It was one in every of a community of funds, banks and authorized organizations to be closely implicated. So-called co-ex commerce.

It focuses on transactions the place shares have been offered from one investor to a different instantly earlier than the fee of a dividend (cum, or with dividend), however have been distributed later (ex-dividend).

Those concerned took benefit of delays within the sale course of to create confusion as to who really owned the shares on the time the dividends have been paid. This technique allowed each events to say exemption on withholding tax – a levy that was paid solely as soon as, when the dividend was issued.

From the surface, it was complicated, however for these concerned it led to bigger and extra elaborate companies that in the end price taxpayers throughout Europe billions.

It initially grew to become well-liked in Germany earlier than spreading to different nations together with France, Belgium, Italy and Austria. Solo Capital targets Denmark with most of its Co-X trades since 2013.

Jace Bains joined the agency in 2010 as chief counsel, however moved to run the London workplace. At the time, Solo was “a successful firm, making money very well in five or six different areas”.

And earning money means having fun with the excessive life, with workers touring to locations like Las Vegas, Singapore and Dubai.

“What I would say about Sanjay is that he knew how to throw a party,” he says.

“Once we were at the Coo de Ta club at the Marina Bay Sands hotel in Singapore. They bought 20 bottles of vintage Dom Perignon champagne, and people were just spraying each other.

“People have in contrast it to The Wolf of Wall Street and so forth.”

The matter did not end here. “Sanjay organized personal live shows in Dubai with Prince. A small room for a night with him and his pals for 3 or 4 million {dollars}… Private live shows with Snoop Dogg.”

However, by mid-2014, Mr. Bains had a falling out with his boss and left the company for a competitor. At that time, co-ex transactions targeting Denmark were increasing dramatically.

“I was hearing from people who left Solo that Sanjay was doing some big business in 2014, but look, I moved on, it had nothing to do with me,” he says.

“But then I heard, actually Sanjay made close to €100m in business from Denmark in 2013, close to €250m in 2014 and he was looking at a billion euros in 2015.”

Alarm bells were ringing.

“I believed it couldn't be proper. It's not that I believed the trades have been invalid or felony in any means. It's simply any nation that has a billion euros laundered will scream bloody homicide.”

Solo Capital was no longer the only company targeting Denmark. Other people were also participating in this work. Jace believed it was only a matter of time before the house of cards collapsed.

He explains, “I used to be assured that I had achieved nothing fallacious, however I knew that if this continued and occurred in spectacular trend, I’d be in bother.”

With this in mind, in 2015, he decided to blow the whistle.

He contacted a Danish lawyer, who put him in touch with the Danish police. He spent two and a half years helping her understand how the co-ex scam works.

Danish prosecutors did not target Mr. Bains. His attention was firmly focused on Mr Shah. The 54-year-old was eventually extradited from Dubai to face fraud charges – and was in December last year sentenced to 12 years in prison,

This was the heaviest fine ever handed down in a fraud case in Denmark. She is currently attractive.

But when the Danish tax authority, Skatforvaltenningen (Skat), launched its major case to recover his lost money, Mr Bains was one of more than 100 individual and corporate defendants initially targeted along with Mr Shah.

The pendency of that case made it out of the question for him to work as a lawyer, or to find any role in the City of London.

“It's not possible to get a job in the event you're being prosecuted for a $2 billion worldwide tax fraud case,” he says.

However, in October, High Court judge Mr Justice Andrew Baker rejected Scott's claims.

While acknowledging that “greed is usually a highly effective motive, and I consider there was substantial greed right here”, he nevertheless concluded that Scott had failed to prove that he was the victim of deception.

“The authority's controls for assessing and paying dividend tax refund claims have been so weak as to be non-existent,” he said.

This appears to echo an earlier statement by Mr Shah in a 2021 German TV interview, which was also quoted in the judgment:

“Why would they pay for years after which after 4 years of funds say, 'Oh, we made a mistake, or we have been cheated,'” he mentioned.

“If there’s a huge board on the street that claims 'Please assist your self', I or another person will personally go and assist.”

There should still be an enchantment. But for Mr. Bains, the decision supplied some much-needed closure — and, he says, an opportunity to maneuver ahead.