In Testimony, Kiener Admits He Ran €345M Ponzi Scheme

Apr 14 2011 | 11:06am ET

Despite a year-and-a-half of pugilistic pronouncements, threats and vows to defend himself, delivered primarily through his lawyers, accused hedge fund fraudster Helmut Kiener's first official statement was something of an anticlimax.

Kiener told a Würzburg, Germany, court today—again, through a statement read by his lawyer—that he did, in fact, run the €345 million Ponzi scheme prosecutors accuse him of. Kiener's lawyer, Achim Gröpper, called the defense plea "a confession, for the most part."

"I just didn't have the courage to liquidate the K1 funds when I saw they got into trouble," Kiener wrote and Gröpper read. "I trusted that I could make up losses by investing just more and more new money."

Blaming "enormous psychological pressure" to succeed, Kiener, a trained psychologist, said he "came up with the idea to use my computer to forge some of the account statements. After getting through with it one time, that nasty habit sort of slipped in."

Kiener faces up to 15 years in prison on the 121 counts of forgery, aggravated fraud and tax evasion. He is one of eight people arrested in the case; one of them, a managing director at K1's administrator, is on trial, another committed suicide as police pursued him.

Kiener did live up, at least in part, to one promise: an attempt to spread the blame to some of his victims, namely his banks, Barclays and BNP Paribas.

"As the banks approved all my investment suggestions, I felt on the safe side," Kiener said. "I thought my investment decisions would be equivalent to market practices."

But some matters Kiener acknowledged he had to take full responsibility for, such as using K1 funds for personal purposes, in contravention of his agreements with the banks.

"I know that this was a conflict of interest and that I violated investment rules I had with the banks, and I bitterly regret it," he said.

Gröpper read out only about 20% of Kiener's statement today, he said. The rest will come on May 4.


In Depth

JOBS Act Propels Real-Estate Crowdfunding Platform

Oct 21 2014 | 2:57am ET

If D.J. Paul were a real estate development, he would be described as “multi-use...

Lifestyle

Strippers Accused Of Robbing Hedge-Fund Manager Face Jail

Oct 20 2014 | 9:20am ET

A group of alleged stripper-thieves—whose victims include a hedge-fund manager...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.