WKStA assumes damage of over ten million euros. Defendant made exorbitant profits from market manipulation.
In Salzburg, a 41-year-old German stood trial on Wednesday for income tax evasion in the millions. The former stock market speculator is said to have not reported high income from stock transactions in the financials in 2006 and 2007 as well as 2010 to 2012. The exorbitant profits – we’re talking about 20 million euros – were made by the man with unclean methods that drove many investors out of their money. He never had to answer for it under criminal law.
The Economic and Corruption Public Prosecutor’s Office (WKStA) assumed damage of 10.3 million euros in its 109-page indictment. The Finanz put the lost income, however, clearly lower at 7.6 million euros. “The difference is that the tax office had fewer documents and calculated profits and taxes differently,” said the prosecutor, explaining the discrepancy. The defendant not only traded in his own shares, but also carried out transactions for other people. “Public prosecutors and finance agree that he ran a business and should have taxed his profits. But he never filed an income tax return.”
Instead, the defendant went to Switzerland to cover up the transactions. “There a bank recommended that he set up a separate offshore company for every major equity position.” Ultimately, the result was a complex network of companies – often with headquarters in Central America and straw men as managing directors. The 41-year-old largely admitted the allegations today: “I’m sorry, but I don’t want to comment. I work every day to repair the damage.” In fact, he has already paid 2.6 million euros in compensation – a third of the amount demanded by the tax office in its notices. In addition, he should have access to a further 550,000 euros in Switzerland. “He wants to get that over with,” said his defense attorney Kurt Jelinek. In 2006, the year in which the financial sector suffered the greatest damage, his client was a 25-year-old boy. “This thing has been hanging over him since then. It gnaws at his health, it tears.” Jelinek called for a penalty in the lower range: “He is innocent and pleads guilty. In addition, there is the excessive length of the proceedings and the compensation. He also does not lead a life of luxury. The aim is to find a punishment that he can somehow manage.” The prosecutor emphasized today that tax evasion is not a trivial offense. “If you steal ten million euros today, you will be in the newspaper every day for a month. If you evade ten million euros, that’s a side note.”
During the trial it was also discussed how the defendant had made his money with so-called “penny stocks”. These are stocks that can be bought cheaply – and for which the German, who has been living in Salzburg for many years, subsequently ensured a decent price development, explained the prosecutor. And he delivered the instructions right away: “You take an empty company jacket with a name that sounds good, list the company on the stock exchange, advertise a lot and give a purchase recommendation and price targets,” the public prosecutor explained.
Specifically, it was about a supposed gold mine that had been found and wanted to exploit. Admittedly: the company was never operational. Because the purchase of the shares was heavily advertised, the demand picked up and the prices rose massively.
“The defendant paid seven cents each for the shares, the high value was then 18.50 euros,” explained the prosecutor. The German himself owned large stocks of the securities and then sold them with enormous profits. “He was right in the middle of this game – and misled the audience with false information.”
As a result, there were major criminal proceedings in Germany in 2012 for price manipulation. Three accomplices of the defendant were sentenced to prison terms of between 21 months and 38 months. The 41-year-old himself was arrested three times for short periods in Austria in 2011, but was ultimately not bothered. “He admits the market manipulation,” said defender Jelinek. “But in Austria, in contrast to Germany at that time, this was not a criminal offense.”
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