Sunday, 29 May 2016
Last updated 1 day ago
Nov 11 2009 | 9:15am ET
Accused German hedge fund fraudster Helmut Kiener is still in jail after his claims of diplomatic status were rejected.
The K1 Group founder, who was arrested last month on suspicion of fraud and breach of trust in an alleged scam that authorities say may have cost his banks and brokers US$400 million, failed to convince a judge in Würzburg that he was an attaché for Guinea-Bissau, a country of 1.6 million on the west coast of Africa, registered in the Netherlands.
But Kiener’s lawyers didn’t stop there, accusing prosecutors of being the tools of a “witch hunt” organized by K1’s banks, including Barclays, BNP Paribas and JPMorgan Chase. Kiener’s lawyer, Lutz Libbertz, told the court in a filing that prosecutors are relying on “unfounded” allegations from those banks, Bloomberg News reports.
Indeed, it seems the K1 case was born from the findings of JPMorgan. The firm inherited about US$100 million in exposure to K1 when it bought Bear Stearns, and decided to investigate the firm when it didn’t recognize most the hedge funds K1 claimed to invest with. The bank reportedly discovered that three of firms allegedly managing money for K1 were controlled by Kiener. When prosecutors looked into it, they reportedly found that more than 90% of the money loaned to K1 by Barclays and allegedly invested in the three funds was sent right back to K1, and is “for the most part” lost.