During WWII, the German Gestapo would think nothing of incarcerating a suspect for a year or longer before perhaps filing charges. Maybe that’s why German prosecutors were comfortable keeping alleged hedge fund fraudster Helmut Kiener on ice for a year as they got their ducks all lined up in a row.
Prosecutors raided Mr Kiener’s home office in Aschaffenburg, near Frankfurt, a year ago and put him under investigative custody. Finally, Kiener has been formally charged with defrauding investors, banks and brokers of €345 million.
Würzburg prosecutors pounded the K1 Group founder with 86 counts of forgery, 35 counts of aggravated fraud and one count of tax evasion. Kiener was arrested last October on suspicion of fraud, one of eight K1 employees or associates arrested in the alleged Ponzi scheme.
Lutz Libbertz, defence lawyer, said Mr Kiener would take the stand in court “to expose how greedy the customers were” who were lured by K1 brochures boasting of stellar returns of 17 per cent a year.
“The investors were allegedly promised substantial profits even though both funds had massive losses,” Dietrich Geuder, a spokesman for the prosecutor’s office, said. “Pretend profits could only be paid out using newly invested money.”
A second suspect in the case, identified as Claus Z., was also charged today. He was a managing director of Treukapital Treuhandverwaltung, K1′s administrator.
Z. was one of three previously unidentified people arrested last week as the investigation continues. Two of them, 35 and 80 years old, were managing directors of Treukapital. The other was the auditor of two K1 funds.
Treukapital’s David Zuendorf was among the five people arrested earlier. Two Kiener associates have been arrested in the U.S., while the fifth, Dieter Frerichs, former managing director of two K1 funds, committed suicide in July.