Dusseldorf Well-known entrepreneurs, an ex-soccer player and many a billionaire trusted her advice. The lawyers at a Munich law firm had made a name for themselves when it came to complex transactions or tricky tax issues. By working for the exclusive clientele, they made millions themselves.
The charge of the Augsburg public prosecutor’s office weighed heavily: the law firm had set up a large-scale tax evasion model. In addition to the lawyers, many customers were also suspected. With more than 100 suspects, it was one of the largest criminal tax proceedings in Germany.
Clients as well as colleagues doubted the honesty of the lawyers. The law firm fell apart, its reputation was ruined. Two of the lawyers had to answer in a pilot trial, others were to follow. The whole thing ended in a huge embarrassment for the public prosecutor. The proceedings were discontinued and the defendants were awarded compensation claims.
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It is now clear to what extent claims are rolling towards the state: between around 90 and 100 million euros. After the two once main culprits demanded a total of 30.5 million euros, a third lawyer has now followed suit and wants to ask the state to pay 27 million euros. He was acquitted in a second trial.
And according to insider circles, three tax advisors will soon be demanding a total of around 30 million euros. You work for a company with which the lawyers from the dissolved law firm once worked closely. In the end, the trio did not have to sit in a dock, but were also in custody for months. Further millions claims are likely to come from a seventh formerly imprisoned lawyer and tax advisor.
Controversial tax model
The origin of all anger was the Goldfinger tax model, named after a well-known James Bond film. The principle: With gold trading companies abroad, top earners could generate tax losses and ideally reduce their tax burden to zero – until the legislature stopped the morally questionable model years ago.
For the years before, the Federal Fiscal Court, as the highest German tax court, had recognized this in principle. But the Augsburg investigators saw criminal activity in the specific conception of more than 20 companies, and there was talk of sham deals.
In the end, they were left alone with the theory. The taking of evidence did not reveal that the defendants wanted to set up a tax evasion model, made false statements or withheld facts, according to the presiding judge.
Worse still: Virtually none of the prosecutors’ narrative of tax evasion was true. Instead, things were brought to light that suggest that the months of imprisonment and subsequent charges should not have come about and that the responsible investigators may have ignored exculpatory documents and statements.
The former persecuted have therefore now become persecutors. They filed a number of criminal charges against the former investigators, including for deprivation of liberty in office. In their compensation applications, the lawyers explain in detail how the actions of the Augsburg public prosecutor’s office tore away their former professional basis from under their feet.
Platform destroyed by action by the judiciary
Over the years, the law firm had grown step by step, with sales increasing regularly and in some cases significantly. At the same time as the searches and arrests, further growth was imminent. Additional lawyers should be hired. At the office in Munich’s posh district, two floors had been converted into office space.
The law firm’s platform was “irretrievably destroyed” by its dissolution as a result of the imprisonment, according to the request for compensation made by the firm’s former partner.
Especially for him, who is now asking for 27 million euros, this had a decisive effect. As a specialist in transactions, he was particularly dependent on lawyers working on him and was therefore able to work almost completely with three lawyers by the time he was arrested.
In the firm, which he has now newly founded, he is far from able to build on the previous sales. For more than two years he was unable to employ salaried lawyers. Finally, there was no longer any share of the revenue from new partners, which had been agreed in the former partnership agreement.
Now it is the turn of the Augsburg public prosecutor’s office. She had recently referred back the application of the two former main defendants with claims in excess of 30.5 million euros. The prosecutors argued that the damage items were not sufficiently substantiated and proven. The lawyers are due to submit further evidence by December 15.
In any case, the Free State of Bavaria seems to be only partially prepared for compensation claims of this magnitude. In any case, in the state budget for 2021, only 5.86 million euros are earmarked for compensation for suspects in criminal matters. It is quite possible that adjustments will have to be made in the future.
More: Acquittal for the defendant in the Goldfinger trial