K1 Suspect Commits Suicide To Avoid Extradition

Jul 6 2010 | 1:40pm ET

Dieter Frerichs, accused of participating in the K1 Group hedge fund fraud, committed suicide on Saturday to avoid arrest and extradition to Germany.

Frerichs shot himself after Spanish police arrived at his home on the island of Mallorca to arrest him, the Würzburg, Germany, prosecutors’ office said.

Last year, the Würzburg prosecutors arrested K1 founder Helmut Kiener on suspicion of fraud and breach of trust. Authorities believe that K1 was a Ponzi scheme that may have cost investors more than €90 million and the fund’s banks and brokers some €300 million. Frerichs was a managing director of two British Virgin Islands-domiciled K1 hedge funds.

Four other people have been arrested in the case, including Frerichs, who was first picked up in April but then conditionally released. Two Kiener associates were arrested in the U.S. in October and another was arrested in Germany in April.

Frerichs’ suicide comes after Würzburg prosecutors sought his extradition, leading a Madrid court to order the second arrest. Police arrived at Frerichs’ home in Palma at 11:30 a.m. on July 3.

The sunbathing Frerichs then grabbed a gun from his bag and fled into the Mediterranean Sea. His first attempts to fire the weapon were unsuccessful, because it was wet, but Frerichs managed fire one shot into the air and a second into his head. He died later in a hospital.

Frerichs’ stepdaughter claims that he was actually shot by the police, an accusation the police deny.

“It is not normal to be sunbathing with a bag that has a gun,” a spokeswoman for the Spanish police told The New York Times. “But that’s what he did.”

The police said an autopsy would be conducted, and that Frerichs’ gun was recovered from the water.

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