A U.S. appeals court in New York has upheld a judgment of 476 million dollars, about 3.2 billion kroner, against two American financiers and their wives in Denmark’s dividend tax case.
The Court of Appeals in New York confirmed the lower court ruling against Richard Markowitz and John van Merkensteijn on August 31, DR reports. Their wives, Jocelyn Markowitz and Elizabeth van Merkensteijn, are also liable, along with pension plans the men controlled.
According to the 61 page ruling, the two men and their companies had on paper traded 10 percent of all Novo Nordisk shares in March 2013. They had never bought a single Novo share. The court noted that such volumes are normally handled only by institutions such as BlackRock, State Street and Bank of New York Mellon.
Revenue rule defense rejected
The defendants argued that they were not liable, citing the revenue rule, a 400 year old British principle also used in American case law. It holds that U.S. courts cannot enforce other countries’ tax cases. The judge found this was ordinary fraud rather than tax evasion, so the rule did not apply.
The law firm Hughes Hubbard, which represents the Danish tax authorities, states that the court found Denmark was seeking to recover money obtained through fraud. As noted in its summary of the appeal ruling, the defendants conceded they never owned Danish shares, never received dividends and never paid Danish withholding tax.
The men also claimed that Sanjay Shah had misled them, and that they believed the shares were bought and held at Solo Capital. The ruling states that the jury clearly did not believe that account. According to the judgment, no shares existed and no money moved, only fictitious accounting entries.
The case stems from the Danish dividend tax scandal, in which foreign fraudsters drained 12.7 billion kroner from the Danish treasury between 2012 and 2015, according to Danish authorities. Shah, convicted as the main figure, appealed his 12 year prison sentence in December 2024.
Markowitz previously worked as a director at Goldman Sachs, while van Merkensteijn spent decades as a tax lawyer. Neither faces criminal charges. They were sued only in civil proceedings by the Danish tax authorities in the United States.
The lawsuit centers on small American pension funds they established, which were exempt from Danish dividend tax. By claiming to hold large volumes of listed Danish shares, the funds received refunds over several years. The Danish news site Dagens also reported the ruling and the Novo Nordisk trades.
The decision ends an eight year legal battle in the United States, where Denmark has sued numerous people and companies. Settlements include one with attorney Michael Ben-Jacob, who helped the two men with the setup. The defendants can ask the U.S. Supreme Court to hear the case, which it may decline. DR states that defense lawyers and Skattestyrelsen had not responded to requests for comment.
