UPDATE 2-Former Freshfields partner sentenced to jail for German tax fraud
(Updates with quote from judge in paragraph 3, detail throughout, no comment from legal team in paragraph 4)
By Tom Sims and Kirstin Ridley
FRANKFURT, Jan 30 (Reuters) - A former global tax head at law firm Freshfields was sentenced to three and a half years in jail on Tuesday for his role in a German tax fraud that has ensnared scores of banks and hundreds of individuals.
A Frankfurt court found Ulf Johannemann assisted now-defunct Maple Bank in fraudulent "cum-ex" trading. Such schemes were rife more than a decade ago and are estimated to have stripped state coffers of around 10 billion euros ($11 billion) in total.
"There was somewhat the impression that your regret was regret because you were caught, and not regret because you did something wrong," judge Werner Groeschel said at the sentencing.
Johannemann's legal team declined to comment on the verdict in the trial, during which prosecutors had alleged his work for Maple Bank helped result in some 390 million euros in lost tax.
Using such dividend stripping schemes, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.
The loophole that allowed the trading to thrive between 2005 and 2012 is now closed, but a lengthy investigation has taken on vast dimensions as courts and officials try to hold wrongdoers to account and claw back lost from government coffers.
Neil Swift, a partner at London law firm Peters & Peters, said the case shows "that those whose flawed advice facilitated serious criminal conduct can expect severe criminal sanction".
Prosecutors, who had called for a five and a half year sentence, said Johannemann wrote expert opinions for Maple Bank to give the trades a "supposedly legal appearance".
A former executive of the defunct bank was also sentenced on Tuesday to a two year suspended sentence.
London-headquartered Freshfields Bruckhaus Deringer declined to comment, noting it was not a party to the case.
"We continue to work with the authorities, within the boundaries of our professional obligations, in an effort to learn from and draw a line under these matters," the firm said.
Freshfields paid a voluntary 10 million euros to the German tax authority in 2021 in a deal that avoided any prosecution over its advice to Maple Bank. It also paid a 50 million euro settlement with Maple Bank's administrators in 2019. ($1 = 0.9231 euros) (Reporting by Tom Sims; Editing by Madeline Chambers, Kirsti Knolle and Alexander Smith)