Despite a trio of arrests, including of the firm’s founder, the auditor for fund of hedge funds shop K1 Group said it would be “bold” to assume the fraud allegations against it are true.

Josef Augustin Becker, a finance and accounting professor who serves as the auditor of K1’s Participation Rights Class A fund, told Reuters that the firm’s liquidity is “scarce” because its underlying managers are illiquid, and not necessarily because of the alleged fraud committed by K1 founder Helmut Kiener.

“For some months now the liquidity of K1 is apparently scarce,” Becker wrote to Reuters. “Reason is: the target funds are not liquid and are limiting payouts.”

Kiener was arrested Wednesday on suspicion of fraud and breach of trust. Two others were arrested in the U.S. as part of his alleged scam, which may have cost his banks and brokers US$400 million.

Becker, who teaches at the Fachhochschule Ludwigshafen am Rhein, complained that press coverage of the K1 allegations “can destroy the credibility of a fund, with the consequence that the investors need to wait a long time for repayment.”

“Until now nothing has been proven,” he wrote.