Indicted German Financier Freed in Italy
A German hedge fund manager wanted on securities fraud charges in Los Angeles has been released from an Italian jail, his lawyer said, in what appeared to be a serious setback for United States prosecutors.
Florian Homm, facing charges that could have effectively led to life imprisonment , was set free from a jail in Pisa after the Italian supreme court ruled late Tuesday that he had been held longer than allowed, said Jan L. Handzlik, a lawyer in Los Angeles who represents Mr. Homm.
Mr. Homm, jailed since early last year, returned to Germany, Mr. Handzlik said, where he is apparently safe from extradition. “We are gratified by the court’s ruling and delighted that Florian’s 14-month nightmare has come to an end,” Mr. Handzlik said in an email.
An official atthe jail in Pisa where Mr. Homm had been held confirmed that he was released on Tuesday based on the court order.
The release appears to have taken place without advance notice to United States prosecutors, who accused Mr. Homm of defrauding clients of $200 million. The release also mars what had seemed like close cooperation between American and Italian law enforcement officials.
The Italian police arrested Mr. Homm at the Uffizi Gallery in Florence in March 2013, acting on a United States warrant. Mr. Homm, a well-known figure in Germany, had only recently appeared on German television and was in Florence to meet his ex-wife and adult son. Italy has an extradition treaty with the United States but Germany does not.
The arrest caught Mr. Homm by surprise, and he had been fighting extradition ever since. He suffers from multiple sclerosis and also complained that he did not receive adequate treatment in jail.
Italian courts had previously rejected his appeals, and the country’s Ministry of Justice had ordered Mr. Homm to be extradited.
However, Mr. Homm remained in Italy while his lawyers continued to try to prevent him from being sent to Los Angeles. He faces 10 criminal counts that carry maximum sentences long enough to keep him in prison for the rest of his life.
According to Mr. Handzlik, the Italian supreme court, the Corte Suprema di Cassazione, ruled that Mr. Homm could not be held longer than 45 days after the order by the Ministry of Justice to extradite him.
Mr. Homm, who has written a book about his exploits but denied any criminal wrongdoing, is accused of leading a scheme to defraud investors of his former hedge fund in the Cayman Islands, Absolute Capital Management Holdings Ltd.
Prosecutors say he manipulated the prices of thinly traded United States stocks, including shares of one company that offered sex advice, another that sold drive-in gourmet coffee, and a third that staged martial arts fights.
By trading the shares among entities that he controlled, including a brokerage in Los Angeles, Mr. Homm made his hedge fund appear more valuable than it was, which enabled him to increase the fees he charged his investors, prosecutors say.
He and other suspected co-conspirators, including former managers of Absolute Capital, also face a civil suit by the Securities and Exchange Commission, as well as a suit filed in District Court for the Southern District of New York on behalf of investors in Absolute Capital funds.
Mr. Homm, who once controlled one of Germany’s top professional soccer teams, disappeared in 2007 after the hedge fund collapsed. He lived much of the time in Colombia, according to his own account. He reappeared in 2012 to promote an autobiography in which he chronicled his exploits.
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In the book, Mr. Homm acknowledged numerous sins including drug abuse, womanizing and being a terrible father. But he denied committing any crimes.
“My behavior can be considered opportunistic and unethical,” he wrote. “However, whether my actions constituted criminal or civil fraud is an entirely different matter.”
Mr. Homm maintains that he disclosed to regulators and investors that he owned a 50 percent stake in a Los Angeles broker, Hunter World Markets, which conducted trades on behalf of Absolute Capital and led to accusations of self-dealing. “Nothing about my stake was secret,” Mr. Homm wrote in the book.
Mr. Homm “continues to deny acting against the interests of A.C.M.H. and its shareholders, and believes he would have been exonerated at trial,” Mr. Handzlik, the defense lawyer, said in his email late Wednesday. “Whatever Florian’s past conduct, it was not done with an intent to defraud anyone. “
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