by Giles Cadman
The FBI has accused German Hedge Fund Manager Florian Homm of defrauding investors of at least $200m. He was recently arrested in Italy after five years in hiding.
Mr. Homm was one of Germany’s best-known financiers before he disappeared in 2007 as his portfolio of hedge funds, Absolute Capital Management Holdings, was collapsing.
According to the F.B.I., Mr. Homm earned commissions as a result of trades between a broker in which he owned a stake and the hedge fund. The trades inflated the prices of penny stocks and made Absolute Capital Management look more valuable than it was, the F.B.I. said in a statement, in a practice known as “portfolio pumping.” Mr. Homm and people he worked with are accused of earning $53 million through the scheme.
Mr. Homm faces charges of conspiracy to commit wire fraud, wire fraud, conspiracy to commit securities fraud, and securities fraud.
The Securities and Exchange Commission has already taken action against him.
Since 2011, Mr. Homm has been the target of a civil suit by the U.S. Securities and Exchange Commission, which accused him of manipulating share prices by buying and selling thinly traded shares between entities he controlled. Last week, prosecutors in Los Angeles filed criminal charges against Mr. Homm based on the same circumstances. The Italian police arrested Mr. Homm at the request of the U.S. authorities.
