Danish Tax Authority Wins $500 Million Verdict in US Fraud Case

Danish tax authority Skatteforvaltningen (SKAT) has secured a major legal victory in a US tax dispute involving a years-long fraud scheme. The US District Court for the Southern District of New York ruled in SKAT’s favor on February 10, following a five-week jury trial, awarding the agency $500 million in damages.

New York-based law firm Hughes Hubbard represented SKAT, with a legal team led by partners Marc Weinstein, Bill Maguire, and Neil Oxford. The case involved multiple American defendants, including investors Richard Markowitz, Jocelyn Markowitz, John van Merkensteijn, Elizabeth van Merkensteijn, and Robert Klugman, along with various pension plans linked to these individuals.

According to SKAT, in 2012, Richard Markowitz and John van Merkensteijn, along with their former partners in Argre Management, were approached by Dubai-based businessman Sanjay Shah to take part in a scheme defrauding the Danish tax authority. Between 2012 and 2015, the defendants allegedly filed 1,214 fraudulent refund claims, falsely asserting that US pension plans they controlled owned billions of dollars in Danish stock.

SKAT alleged that the defendants claimed they had received approximately $1.2 billion in dividend payments net of withholding tax and sought refunds amounting to roughly $476.9 million. In total, SKAT contended that it paid out approximately $2.1 billion in fraudulent refunds during this period.

The lawsuit asserted claims of fraud, aiding and abetting fraud, and negligent misrepresentation against all US defendants, with SKAT initially seeking over $1 billion in damages. Although the final judgment of $500 million falls short of the amount originally sought, SKAT’s legal team considers the outcome a substantial success.

Hughes Hubbard partner Neil Oxford expressed satisfaction with the ruling, stating, “This case represents a significant step in SKAT’s global efforts to recover stolen funds and hold those responsible accountable. The complexity and scale of this fraud required a dedicated and skilled team, and we are proud to have delivered justice for our client.”

The US litigation forms part of a broader international strategy by SKAT to reclaim fraudulent tax refunds in jurisdictions including England, Denmark, Malaysia, the UAE, Canada, and the Netherlands. ITR has previously reported on Sanjay Shah’s legal battles with SKAT in the UK, including a landmark Supreme Court decision allowing the Danish authority to pursue fraud cases against multiple companies.

In December, Shah was sentenced to 12 years in prison in Denmark over tax fraud, marking a pivotal moment in the global crackdown on fraudulent tax refund schemes.

By fLEXI tEAM