Financial Turnaround Initiative | Inequality in court

Rare picture: Cum-ex tax lawyer Hanno Berger was sentenced to several years in prison. Photo: dpa/Helmut Fricke Paul grew up with his father - an electromechatronics engineer who is retiring early for health reasons. After secondary school, Paul moves out and begins an apprenticeship. He breaks this off to help his sick father. Lack of money, giving up his own apartment and caring for his father mean that Paul becomes increasingly socially isolated. He therefore does not inform the social welfare office that he lives in a shared household with his father and receives several thousand euros.

Jonas grew up as the son of a lawyer and a doctor. He completed his Abitur as second best in his class and then studied law in Munich and London. He begins his professional career at an international financial services provider, collects a six-figure salary and invests money in the capital market. After Jonas got married and bought a house, he used his tax law expertise for illegal transactions and defrauded tax authorities in several countries of millions of dollars.

No matter how different Jonas and Paul's lives were, what they have in common is that they both committed criminal offenses. In each case, damage is caused to the state treasury - and ultimately to society. However, tax evasion is regulated outside of the criminal code, while abuse of social benefits is considered fraud and is therefore punished according to the criminal code. The legal requirements are almost identical in content: Anyone who intentionally deceives the responsible authority and receives a state benefit to which he or she is not legally entitled is liable to prosecution. 

“Nevertheless, Jonas and Paul do not have to fear the same criminal consequences,” writes the Finanzwende initiative in a recently published report. When it comes to the so-called legal consequences, there are serious differences between the two crimes. Tax evaders have certain privileges compared to social benefit fraudsters: they have the option of a so-called voluntary self-disclosure that exempts them from punishment and they benefit from the fact that there is no criminal offense for tax evasion.

Now Jonas and Paul are fictional characters. For the organization Finanzwende, which the former Bundestag member Gerhard Schick (Alliance 90/The Greens) founded in 2018, the two guys are examples of the lax approach to white-collar criminals. The co-author of the report is the former Cologne public prosecutor Anne Brorhilker, who became known for her success in investigating cum-ex deals - illegal stock market transactions that cost the German state billions of euros.

The report is based on a report by Nicole Bögelein and Levin Reichmann from the Institute for Criminology at the University of Cologne. Administrative and law enforcement practices were examined as well as, where available, statistics on white-collar crime and welfare fraud. The result: In many cases, people with lower incomes who commit so-called poverty crimes have to expect more consistent prosecution than tax criminals who are usually much better off financially. 

What contributes to this imbalance in the German legal system is that social benefit fraud is comparatively easy for the authorities to identify and prosecute. Complex, internationally organized economic crimes - which go beyond tax law and are then also prosecuted - often tie investigators up for years and require considerable resources in the offices. In addition, there are “structural deficits” in the official apparatus, in terms of personnel, IT equipment and the cooperation between, for example, the public prosecutor’s office, tax authorities, criminal investigation offices and the customs anti-money laundering unit.

After all, not all pinstripe perpetrators get away scot-free. The expansion of specialized public prosecutor's offices, courts specializing in economic crime and other measures in the federal states are having an effect, report specialist media such as the "Deutsche Richterzeitung". At the same time, the public has the impression that authorities only celebrate “successes” in high-profile cases. The lawyer Hanno Berger, who is considered the initiator of “cum-ex” transactions, was sentenced in May 2026 to a total sentence of ten years. Berger is the focus of the extremely successful ZDF film “System Error – The Cum-Ex Scandal”.  

"It's not about trivializing social benefit fraud, but about measuring things with the same yardstick," explains Anne Brorhilker, now managing director of Finanzwende. Anyone who deprives the state of millions or billions should not benefit from the fact that authorities are worse positioned to deal with complex economic crimes than they are to deal with poverty crimes that are easy to investigate. Financial transition calls for a political debate about how these structural problems can be overcome.

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