Helmut Kiener, the German hedge fund manager accused of a Ponzi scheme, is going to ask the courtroom to place part of the blame for his 630-page long fraud charges on his clients, according to the defence his lawyer described to the Financial Times.
Kiener was charged Tuesday with 35 counts of aggravated fraud and 68 counts of forgery and the charges against him fill 630 pages, but some of this, he believes, is because his clients held a figurative gun to his head. He was simply trying to fulfil their greedy demands on him to perform.
His defence lawyer told the Financial Times:
[Kiener has vowed to] take the stand “to expose how greedy the customers were” who were lured by K1 brochures boasting of stellar returns of 17% a year…”the greed of the investors should help reduce any sentence the court may decide to hand down”.
Actually, we believe his clients might have been lured by returns in the triple digits. According to the NYPost last year:
Kiener runs the K1 Fund family and it flagship K1 Global Sub Trust hedge fund of funds — that is, it uses investor cash to invest in other hedge funds — which said it managed a net return of 844% over the past 13 years, more than 15 times better than the S&P 500 Index.
And while we’re on the subject of greed, it might be a good time to mention Kiener’s $37 million Bombardier Global Express long-distance jet, the Florida mansion he built on land that was used in the movie “Bad Boys II” (they movie showed a house being blown up on the property), and the two giant 8-by-5-foot flat- screen TVs hidden mounted on hydaulic lifts that raised out of the grass.
But maybe Kiener’s excuse is genius. He genuinely believes exposing the greed of his clients’ will help his case, despite it looking like nothing can.
State prosecutors on Tuesday said Mr Kiener used the K1 investment vehicles he founded to defraud 4,924 small-time private investors and banks Barclays Capital and BNP of €345 million ($465 million) in the boom years before the global financial crisis struck in 2008.
And he might be right.
It’s a tough call, because Kiener didn’t just (allegedly) defraud nearly 5,000 investors, he defrauded big banks. JPMorgan Chase, Barclays, and BNP Paribas, according to the NYPost. And we know how good those lawyers are.
But in the US, the nation has somewhat accepted that the millions of homeowners who bought houses they couldn’t afford are partly to blame for the subprime crisis. The consensus is that they were greedy, just like the bankers who gambled with their mortgages.
So hey, it could work.