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Florian Homm, Toppled Financier, Finds Safe Harbor in Germany

Posted by Unknown on Monday, August 4, 2014

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International Business |Florian Homm, Toppled Financier, Finds Safe Harbor in Germany



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Florian Homm was released from an Italian jail in June after using appeals to delay his extradition to the United States. Ben Kilb for The New York Times




FRANKFURT — Florian Homm had long maintained that he was not guilty of charges that he defrauded investors of more than $200 million. Still, he wasted no time when word reached him in an Italian jail late on the afternoon of June 3 that Italy’s supreme court had — much to the consternation of United States authorities — set him free.


Mr. Homm walked outside, threw away almost all of the possessions he had with him during his 14 months in detention and walked to the city’s train station as fast as possible for someone who has multiple sclerosis.


“I wanted to get out of there,” Mr. Homm, 54, recalled this week, looking gaunt but relaxed in his first interview since his release.


He used a debit card to buy a ticket to Florence. There, Mr. Homm contacted his Italian lawyers, who quickly arranged for a car to whisk him to Germany.



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Soon after dawn the next day, Mr. Homm crossed into Germany and let out a whoop of joy. Germany does not extradite its citizens, and Mr. Homm was apparently safe from the United States authorities who had been eager to bring him to Los Angeles to face fraud charges there.





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Document: Florian Homm Wanted by the F.B.I.


Mr. Homm said he could not believe “how lucky I was.” He added, “They weren’t looking for a six-month penalty, you know.”


German banks were big buyers of subprime mortgage loans and helped cause the eurozone crisis, but the country did not generally produce individual financiers who stood out to the public as faces of the economic crisis. Mr. Homm, with a flamboyant style — he once shared a multimillion-euro home on the Mediterranean island of Majorca with a Russian table dancer — and vast personal wealth, filled that void.


In a 10-count grand jury indictment, Mr. Homm is accused of buying and selling lightly traded shares among entities he controlled in a practice known as portfolio pumping. Authorities say his goal was to artificially inflate the value of the hedge fund he managed, Absolute Capital Management Holdings Ltd., and thus increase the fees paid to Mr. Homm and others, who are accused of earning an illicit profit of at least $53 million. A brokerage firm in Los Angeles partly owned by Mr. Homm was central to the scheme, prosecutors say, and they had planned to try him there. The most serious charges carry maximum sentences of 25 years in prison.


For federal law enforcement authorities, Mr. Homm’s release was another frustrating example of how difficult it has been to prosecute the financiers whose high-risk behavior helped precipitate the financial crisis, and who could also afford the best lawyers.


In Mr. Homm’s case, the same Italian court that ordered his release had earlier upheld his extradition. But Mr. Homm’s legal team was able to take advantage of Italy’s convoluted legal system, filing appeals in both criminal and administrative courts as well as the European Court of Human Rights.


None of the appeals succeeded. Still, the case was delayed long enough to initiate Italian rules on how long a defendant could be held pending extradition, forcing his release.


“This is a huge problem with our justice system,” said Federico Lenzerini, who teaches international law at the University of Siena. “When you say that this system in the end rewards a defendant for delaying as long as possible, sometimes it’s true.”


The Italian Ministry of Justice declined to comment.


Mr. Homm’s legal and personal problems are not necessarily over now that he is back in Germany. United States authorities still consider him a fugitive. The F.B.I. plans to issue a wanted poster for Mr. Homm on Monday, according to Laura Eimiller, a spokeswoman for the agency. Mr. Homm and former employees and associates of Absolute Capital Management Holdings, which was publicly traded in London, have been questioned as part of a money laundering investigation in Switzerland. Swiss authorities are looking at whether Mr. Homm and others hid millions before the hedge fund lost almost all its value in 2007.


Swiss investigators have compiled a thick dossier of testimony from former employees and associates of Mr. Homm or the hedge fund he founded. According to some of the statements, which have been reviewed by The New York Times, Mr. Homm distributed millions of euros among various trusted friends or business partners in the weeks before he fled Majorca in 2007 aboard his private plane. According to Mr. Homm, he lived incognito in Colombia before resurfacing in 2012.


“I was trying to protect my money, so what?” Mr. Homm said, speaking last week at a borrowed office in Frankfurt in the presence of Jan L. Handzlik, his Los Angeles lawyer. He added, “If anybody doubts I had enemies, they should maybe retire to the moon.” In the view of Mr. Homm and Mr. Handzlik, evidence collected by the Swiss investigators exonerates Mr. Homm by failing to show any involvement by him in the questionable trades. Some witnesses portray him as distant from the hedge fund’s day-to-day operations in 2007, the same period he was in the midst of a bitter divorce.


Mr. Handzlik and Mr. Homm acknowledge that evidence gathered by the Swiss does not always portray him in a flattering light. According to one witness, in 2007 Mr. Homm lent 600,000 euros to the owner of a brothel in Berlin. Mr. Homm said he had earlier invested in the brothel. Prostitution is legal in Germany.


“It was a superprofitable investment and it was a legal investment,” Mr. Homm said, adding, “Today I certainly wouldn’t do it.”


Swiss authorities have frozen assets belonging to Mr. Homm worth millions, he said. But Mr. Homm is apparently safe from extradition and imprisonment as long as he stays in Germany. It was only after he left Germany last year to visit his former wife and son in Florence that he was tracked by American and Italian law enforcement authorities and arrested at the Uffizi Gallery.


Mr. Homm is accustomed to traveling the world, but he said being confined to his home country was far better than jail in Italy, which he described as violent and unsanitary, with almost no treatment for his multiple sclerosis.


“If you lived in two square meters of space and the biggest joy in your life is watering a little plant in a cement courtyard,” Mr. Homm said, “this is fantastic.”


Mr. Homm said he had changed since the days when he owned a castle in Luxembourg and a villa and private zoo on Majorca, and was worth as much as 600 million euros. All his money is gone, Mr. Homm said, either taken in the divorce, spent on lawyers, frozen by the Swiss or lost.


Mr. Homm said he was living in a tiny apartment in the Frankfurt area and driving a borrowed car. “My life is so modest it’s hilarious,” Mr. Homm said. He said he had renewed his religious faith while in jail and he wore a wristband acquired during his detention embroidered with the words “faith,” “hope” and “love.”


“I have zero interest in the world of money or finance at this point,” Mr. Homm said. “I will work entirely charitably. My life is consecrated to the holy mother.”


Correction: August 4, 2014

Because of an editing error, an earlier version of this article misspelled the surname of the F.B.I. spokeswoman commenting on Mr. Homm’s legal status. She is Laura Eimiller, not Eilmiller.





Gaia Pianigiani contributed reporting from Rome.



A version of this article appears in print on August 4, 2014, on page B3 of the New York edition with the headline: A Toppled Financier Finds a Safe Harbor in Germany.




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