Tired of niggling questions and feeling underpaid, they had left in 2008 to open Ballance Capital, one of the first full-service, one-stop cum-ex trading shops. Banks large and small will be ordered to hand over cum-ex profits, which could have serious consequences for some. Mr. Shields was always the pupil, a little in awe of the older man’s ability to bluff and charm. “These U.S. pension plans became the holy grail for cum-ex trading,” said Niels Fastrup, a co-author with Thomas Svaneborg of “The Great Tax Robbery.” “They were perceived by tax authorities as very trustworthy, and all European countries had agreements with the U.S., so these plans could claim 100 percent of withheld taxes.”. Martin Shields and Paul Mora met in 2004, at the London office of Merrill Lynch. That defense became less plausible in 2012, after the German government spent millions of dollars to buy 11 hard drives from industry insiders. Title: Less scrutinized has been the role played by Americans, both individual investors and branches of United States investment banks in London, including Morgan Stanley, JPMorgan Chase and Bank of America Merrill Lynch. The fund had just one beneficiary. That is where Mr. Shields took his first job in 2002. These guys were sending self-deleting texts on Snapchat. ”There was this culture in London, and it really came from New York,” he said. Horror Anthology produced by filmmakers from around the world, which explores the subject of Demons, with inspiration from Ancient Mythology, Religion and the Cosmological Horror of H. P. Lovecraft. Build up your Halloween Watchlist with our list of the most popular horror titles on Netflix in October. A desk-thumping variation of that defense is already being offered by Hanno Berger, once the most formidable tax auditor in Germany, who later switched sides and became a cum-ex mastermind as well as an ally of Mr. Shields and Mr. Mora. Last month, the presiding judge issued a preliminary ruling that, for the first time, declared cum-ex a felony, calling it a “collective grab in the treasury.” Punishment has yet to be determined, but the give-it-back and the go-to-prison phases of this calamity are about to begin. The cum-ex reckoning has already begun. Many have said they had no idea how cum-ex traders returned such dazzling profits. Some countries are starting to overcome their reticence, but scholars and bankers say cum-ex and its mutations still pose a financial threat.

By then, Mr. Mora and Mr. Shields were long gone from the London branch. He had joined one of the least visible sectors of the financial world, which pokes at the seams of international finance law, looking for ways to reduce clients’ tax bills.

One of the accused bankers, who under German law can’t be identified by the media, at the courthouse in Bonn in September.
At Merrill, Mr. Shields’s job was to identify “tax-attractive trades,” as he put it in his testimony.

They may insist that if Germany didn’t make the trade impossible, they did not break a law. “But it was widely regarded as insanity inside the bank for it to be extracting money from sovereign treasuries, particularly after the entire sector had been supported by the public purse.”. “I can’t talk to you,” he said, and the Mercedes drove away. By 2006, Mr. Mora’s group was producing immense profits and plenty of internal suspicion. Two refunds. “Remind me never to play poker with you,” he said, according to an internal report later commissioned by the bank.

Several banks have been fined (Deutsche Bank, UniCredit), one has apologized (Macquarie), others have pledged cooperation with investigators (Santander, Deutsche Bank) and two are insolvent. These cookies do not store any personal information. So they moved operations to London and treated the rest of Europe as an anything-goes frontier. As one participant would later put it, taxpayer funds were an irresistible mark for a simple reason: They never ran out. In September, the justice minister of the state of North-Rhine Westphalia, Peter Biesenbach, went so far as to liken cum-ex players to mobsters. When a champion go karting racer retires, a bunch of amateur racers take on each other to become the next greatest.

Germany was the largest bull’s-eye for these traders because it is home to Europe’s largest economy, with dozens of blue-chip stocks. The men in the Bonn case have been charged with “aggravated tax evasion” that cost the German treasury close to $500 million. To German prosecutors, Dr. Berger is an archetype straight out of a potboiler: the revered enforcer who went to the dark side.

The headquarters of HypoVereinsbank in Munich.