Kiener Says Investor 'Greed' To Blame For Fraud

Nov 17 2010 | 5:20pm ET

Alleged fraudster Helmut Kiener plans to blame the clients of his K1 Group hedge fund for the €345 million scam he is accused of masterminding.

Kiener, who was arrested last October but only charged with forgery, fraud and tax evasion this week, will take the stand in his own defense "to expose how greedy the customers were," his lawyer, Lutz Libbert, told the Financial Times.

How greedy were they? They apparently believed Kiener's promises of annualized returns of 17%.

Libbert did not comment on the more than 100 counts facing his client, but he did not sound sanguine about Kiener's chances of beating the rap when he said, "the greed of the investors should help reduce any sentence the court may decide to hand down."

Kiener has consistently denied any wrongdoing and has claimed K1's losses were the result of bad investments. Prosecutors say he was running a Ponzi scheme and lied to his banks, Barclays Capital and BNP Paribas, costing them hundreds of millions of euros.

A total of eight people have been arrested in the K1 case, including a managing director of the hedge fund's administrator, Treukapital Treuhandverwaltung. That man, identified only as Claus Z., was also charged this week.

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