Danish Tax Authority Pursues $1 Billion in US Fraud Trial Against American Investors

Danish tax authority Skatteforvaltningen (SKAT) is pressing forward with its efforts to recover over $1 billion in a high-profile fraud case set to unfold in the United States. The trial, scheduled to begin on January 7 in the US District Court for the Southern District of New York, pits SKAT against several American investors accused of orchestrating an elaborate international tax scheme.

Representing SKAT is a legal team from international law firm Hughes Hubbard & Reed, led by partners Marc Weinstein, Bill Maguire, and Neil Oxford. The firm has taken on the role of lead counsel in this significant litigation aimed at reclaiming revenues SKAT alleges were lost due to fraudulent activities.

The defendants in the case include American investors Richard Markowitz, Jocelyn Markowitz, John van Merkensteijn, Elizabeth van Merkensteijn, and Robert Klugman. Additionally, several pension plans linked to these individuals are also named in the lawsuit.

SKAT asserts that the alleged fraud began in 2012 when Richard Markowitz and John van Merkensteijn, both involved with a company named Argre Management, were approached by Dubai-based businessman Sanjay Shah. SKAT claims Shah recruited the two, along with their former partners, to participate in a scheme targeting Danish tax refunds.

According to SKAT, between 2012 and 2015, the defendants collectively submitted 1,214 fraudulent refund claims. These claims purportedly misrepresented that US pension plans under their control held billions of dollars in Danish stock. The defendants allegedly stated they had received approximately $1.2 billion in dividends, net of withholding tax, from these investments. Based on these claims, the pension plans sought refunds totaling around $476.9 million.

SKAT has filed claims against the US defendants for fraud, aiding and abetting fraud, and negligent misrepresentation. The Danish authority is seeking over $1 billion in damages in what is described as one of the largest tax recovery efforts in recent history.

This US litigation forms part of SKAT's broader global strategy to recover funds lost to tax fraud. The authority has initiated legal actions in multiple jurisdictions, including England, Denmark, Malaysia, the UAE, Canada, the Netherlands, and others.

Sanjay Shah, a central figure in the alleged fraud, has faced significant legal consequences. In December, he was sentenced to 12 years in prison in Denmark for his role in the scheme. The case has seen critical developments in the UK as well, where SKAT won a pivotal Supreme Court ruling allowing the authority to pursue numerous companies for fraud.

As the trial begins, the eyes of the global tax and legal community will be on the Southern District of New York, where SKAT's efforts to combat tax fraud face a significant test.

By fLEXI tEAM