How the Heist Worked: The Same Stock Traded Again and Again

"Cum-Ex" means "with" and "without" in Latin, referring to the day dividends are distributed to shareholders. The scheme was devilishly simple: around the dividend date, multiple parties traded the same stocks back and forth between each other. The complex trades made it impossible for tax authorities to determine who actually owned the shares on the relevant date.

The crime was that multiple people received capital gains tax refunds from tax authorities despite the tax being paid only once. In some cases, no tax had been paid at all, yet refunds were still issued. The system required banks to execute transactions, brokers to organize trades, and lawyers to create the legal structures.

From around 2012, legal experts viewed Cum-Ex as a gray area, but it later became clear the practice was criminal. In 2016, legislation finally closed the loophole. But by then, the scheme had cost the state billions. Experts estimate total damages at least 10 billion euros, with some claiming 12 billion.

Banks and Lawyers: From Hamburg to the World

It all started with Hamburg's prestigious private bank M.M. Warburg & CO. Between 2007 and 2011, the bank received approximately 280 million euros in fraudulent tax refunds through Cum-Ex trades. Two owners, Christian Olearius and Max Warburg, along with former CEO Hanno Berger were central figures.

Berger is considered the architect of the entire system. The former tax official turned tax attorney developed the structures and sold them to banks and investors. In 2021, he fled to Italy, where he was arrested. After extradition to Germany, Bonn Regional Court sentenced him to eight years in prison in 2022.

Other key players included HypoVereinsbank, Italian UniCredit, Maple Bank, and numerous international investors and hedge funds. British and American financial firms were also involved. The network spanned multiple countries, making investigations extremely complex.

The first two convicted were stock traders Martin Shields and Nicholas Diable. Bonn Regional Court sentenced them in 2020 to several years in prison for serious tax fraud. It was the first time a German court issued a verdict in a Cum-Ex case.

financial crime

The Scholz Scandal: Meetings Before Tax Claims Were Dropped

Olaf Scholz, Germany's federal chancellor since 2021, was Hamburg's mayor from 2011 to 2018. During that period, he met several times with Warburg bank executives Christian Olearius and Max Warburg — precisely when authorities were investigating the bank for Cum-Ex activities.

The meetings took place in 2016 and 2017. Shortly after the statute of limitations expired on parts of the tax claim against Warburg Bank, Hamburg's tax authority initially dropped demands for 47 million euros. Later, another 43 million euros was waived.

Scholz has consistently denied influencing tax authority decisions. He also cannot remember what was discussed. This memory gap became a meme in German media and earned him the nickname "Teflon-Scholz," because nothing seemed to stick to him.

A Hamburg investigative commission found no direct evidence of political influence. But suspicion remained. Olearius' diary notes showed he viewed the meetings as successful. Federal prosecutors even considered whether Scholz should be questioned as a witness or charged.

Ultimately, Warburg Bank had to repay everything. The political damage for Scholz remained minimal — he was elected federal chancellor in 2021 anyway.

political corruption

Verdicts Fall: From Eight Years to Suspended Sentences

To date, German courts have convicted dozens of people in Cum-Ex cases. Sentences range from suspended prison terms to several years of imprisonment. Bonn Regional Court became the main court for these cases and set important precedents.

In 2020, the first final conviction came down: stock traders Shields and Diable received 5.5 and 4 years and 2 months respectively. The court made clear that Cum-Ex constituted tax fraud, not merely aggressive tax planning.

Hanno Berger, the system's mastermind, received 8 years in prison in 2022. Christian Olearius from Warburg received a suspended 2-year sentence in 2024 after cooperating with authorities. Many other trials against bank executives, tax advisors, and stock brokers are ongoing across the country.

white-collar crime

As of May 2026, over 100 investigations remain open. The Cologne State Prosecutor's Office coordinates many through a specialized unit. Resolution will likely take years.

Recovery is slow. The state has recovered billions, but much appears unrecoverable. Many perpetrators have hidden assets abroad or declared bankruptcy. Additionally, many claims have expired under statutes of limitations.

Cum-Ex has become Germany's largest tax scandal ever — an unprecedented plundering of state coffers, made possible by criminal energy, technical sophistication, and regulatory authorities that slept for 15 years.

tax fraud