Monday, 28 July 2014
Last updated 2 days ago
Mar 11 2013 | 10:57am ET
Flamboyant former hedge fund manager Florian Homm has been arrested—in a suitably theatrical way—and will be extradited to the United States to face fraud charges.
Homm, a German, was picked up in Florence's famed Uffizi Gallery, home to some of the world's great art treasures, at 12:30 p.m. on Friday. Two days earlier, he was charged with defrauding investors in his Absolute Capital Management of US$200 million in Los Angeles.
Homm faces up to 75 years in prison on the conspiracy, wire fraud and securities fraud counts. He also faces civil fraud charges filed by the Securities and Exchange Commission.
Homm's arrest comes four months after he briefly reappeared after five years on the run to flog his memoir, Rouge Financier. The book tells the story of those five years, spent mostly in Colombia, where Homm was shot in 2006, and of Homm's abandonment of his high-flying ways, which he called "the utmost level of excess." He denied hiding from allegations that he had ripped off ACM investors, telling interviewers last year that he has a "long list of enemies," including the Hell's Angels motorcycle gang and the Russian mafia.
Federal prosecutors paint a somewhat more prosaic case: That Homm cross-traded penny shares between ACM's funds to artificially boost their value. He then allegedly "dumped his shares," resigned from ACM, stuffed US$500,000 into his underwear and other places and fled to his Mallorca, Spain, home. He traveled the world for a year-and-a-half on Liberian diplomatic, German and Irish passports before settling in Colombia.
Homm has denied any wrongdoing in the SEC case, although a judge last month rejected his bid to have the lawsuit tossed. Homm said that all of his "activities were conducted in the good-faith performance of my job, which was to increase the value of the relevant ACMH funds to the benefit of the ACMH funds' investors."
Homm would have been safe from U.S. justice in Germany, whose constitution bars the extradition of citizens outside the European Union. But he erred in traveling to Italy. He will be extradited, the Federal Bureau of Investigation said.
Guillermo Hernandez Sampere, the former head of trading at ACM, told Bloomberg Television that Homm is suffering from multiple sclerosis, and that the two met in Frankfurt last month.
The criminal case against Homm was brought in Los Angeles because his allegedly illegal trades were made through a brokerage he co-owned based in Beverly Hills, Calif., Hunter World Markets. The SEC's lawsuit was brought in 2011.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…