Denmark’s tax agency seeks to recover $41 million in allegedly fraudulent tax refunds paid to several Central Kentucky-based pension plans and their representatives.
Among the individuals sued is George Hofmeister, 66, the former pension fund manager who was sentenced in April to 41 months in a federal prison for money laundering and the theft of $600,000 from two employee pension plans.
Another defendant is Bernard Tew, 66, a former investment manager in Versailles for several pension plans.
A 2015 consent judgment issued by a federal judge in Lexington banned Tew and Hofmeister from serving as pension plan fiduciaries or service providers. That judgment came just a few weeks before the Danish tax agency learned that a large network of companies abroad had abused the system.
Telephone numbers for Tew and Hofmeister have been disconnected and they could not be immediately reached for comment.
On Thursday the Customs and Tax Administration of the Kingdom of Denmark, also known as SKAT, filed 15 lawsuits in federal court in Lexington. Each suit contains a separate amount sought for recovery. The total sought in the 15 suits is $41,054,000.
The tax authority says the defendants claimed to own shares in Danish companies and submitted claims for refunds of dividend taxes.
Danish companies are required to withhold a 27 percent tax on dividends. That levy is refundable on dividends paid by Danish companies to U.S. pension plans, which are exempt from taxation, according to a treaty between Denmark and the United States.
The Danish tax authority says that in August 2015 it discovered it had paid dividend tax refunds to foreigners on shares they never held.
“The claimants did not own the shares that they claimed to own, they did not earn the dividends they claimed to have earned, and they were not entitled to the tax refunds they claimed,” the suits say.
The tax authority says it was wrongly forced to pay out more than $2 billion to agents representing 277 pension plans in the United States and others in the United Kingdom, Canada, Malaysia and Luxembourg.
Among the Central Kentucky defendants sued are SRH Farms LLC 401(K) Plan of Versailles; Bluegrass Investment Management LLC, a Versailles company that was dissolved in 2015; MGH Farms LLC, a Lexington company that was dissolved in 2014; Triton Farms 401(K) Plan of Paris; Tew Enterprises LLC Retirement Plan of Versailles; and SV Holdings LLC Retirement Plan of Versailles. Several other pension plans were also named.
Hofmeister, a former Bourbon County resident who now lives in Florida, is scheduled to report to prison on June 28 to serve his 41-month sentence.
Hofmeister once lived on a $14 million property in Bourbon County, and his farm there bought the breeding rights to Real Quiet before the horse won the 1998 Kentucky Derby. Real Quiet also won the 1998 Preakness Stakes. The horse died in 2010.
The 2015 consent judgment required Hofmeister and Tew to repay $299,166 to a pension plan in Michigan.
The director general of the Danish tax authority was fired in 2016 in the wake of the tax-fraud scandal and other problems with its dysfunctional collection system.