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Financier Says He's Guilty of Everything but a Crime Financier Says He’s Guilty of Everything but a Crime
(35 minutes later)
FRANKFURT — Defense lawyers almost always give the same advice to clients facing charges: Don’t say a word in public. That admonishment comes too late for Florian Homm.FRANKFURT — Defense lawyers almost always give the same advice to clients facing charges: Don’t say a word in public. That admonishment comes too late for Florian Homm.
Mr. Homm, a 54-year-old German, is a prominent former hedge fund manager awaiting extradition from Italy to face security fraud charges in the United States. But in the three years since the United States government first made him a target, he has published an autobiography in English and German, given interviews to numerous publications, and appeared on German television.Mr. Homm, a 54-year-old German, is a prominent former hedge fund manager awaiting extradition from Italy to face security fraud charges in the United States. But in the three years since the United States government first made him a target, he has published an autobiography in English and German, given interviews to numerous publications, and appeared on German television.
Even after his arrest last March in Florence, Italy, he wrote a 10-page letter to a New York Times reporter, describing lessons learned from his life in Italian jails.Even after his arrest last March in Florence, Italy, he wrote a 10-page letter to a New York Times reporter, describing lessons learned from his life in Italian jails.
Last Friday, Italy’s highest appeals court refused to block Mr. Homm’s extradition to the United States. Barring a last-minute reprieve from the Italian Ministry of Justice, Mr. Homm could soon be on his way to Los Angeles, where federal prosecutors are waiting to press their case — one in which Mr. Homm himself has provided a compelling narrative, even if he has always insisted that he has committed no financial crimes.Last Friday, Italy’s highest appeals court refused to block Mr. Homm’s extradition to the United States. Barring a last-minute reprieve from the Italian Ministry of Justice, Mr. Homm could soon be on his way to Los Angeles, where federal prosecutors are waiting to press their case — one in which Mr. Homm himself has provided a compelling narrative, even if he has always insisted that he has committed no financial crimes.
Mr. Homm has been more than willing to recount his womanizing and cocaine abuse, his ties to dubious characters, and his five years living incognito in South America after his hedge fund collapsed in 2007. He has described himself as “ruthless,” “somewhat psychopathic” and a “creep.”Mr. Homm has been more than willing to recount his womanizing and cocaine abuse, his ties to dubious characters, and his five years living incognito in South America after his hedge fund collapsed in 2007. He has described himself as “ruthless,” “somewhat psychopathic” and a “creep.”
In the annals of rogue finance, Mr. Homm stands out not so much because of the scale of his alleged fraud, which United States authorities say cost his clients about $200 million. What sets him apart is his compulsion to share his exploits, often in an unflattering light. Perhaps no other accused financier has documented his own rise and fall in such graphic detail.In the annals of rogue finance, Mr. Homm stands out not so much because of the scale of his alleged fraud, which United States authorities say cost his clients about $200 million. What sets him apart is his compulsion to share his exploits, often in an unflattering light. Perhaps no other accused financier has documented his own rise and fall in such graphic detail.
Whether Mr. Homm comes to regret his candor may depend on whether Los Angeles jurors believe the other version of himself that he presents: a changed man who has rejected the life of greed and selfishness he once led, and instead devoted himself to Jesus and charity.Whether Mr. Homm comes to regret his candor may depend on whether Los Angeles jurors believe the other version of himself that he presents: a changed man who has rejected the life of greed and selfishness he once led, and instead devoted himself to Jesus and charity.
Despite admitting many sins, Mr. Homm steadfastly denies the criminal charges, which are serious enough to keep him in jail for decades. The federal authorities filed the criminal charges in March, but he had been a target of the Securities and Exchange Commission since at least 2011.Despite admitting many sins, Mr. Homm steadfastly denies the criminal charges, which are serious enough to keep him in jail for decades. The federal authorities filed the criminal charges in March, but he had been a target of the Securities and Exchange Commission since at least 2011.
“Some of his words may have been ill-chosen, but Florian’s public statements show he has nothing to hide,” said Jan L. Handzlik, a Los Angeles lawyer representing Mr. Homm. But Mr. Handzlik acknowledged that he expected prosecutors to try to use some of Mr. Homm’s words against him.“Some of his words may have been ill-chosen, but Florian’s public statements show he has nothing to hide,” said Jan L. Handzlik, a Los Angeles lawyer representing Mr. Homm. But Mr. Handzlik acknowledged that he expected prosecutors to try to use some of Mr. Homm’s words against him.
Keri Curtis Axel, an assistant United States attorney in Los Angeles, declined to comment on the case this week, but said in an interview last year that the government considered the prosecution of Mr. Homm a high priority.Keri Curtis Axel, an assistant United States attorney in Los Angeles, declined to comment on the case this week, but said in an interview last year that the government considered the prosecution of Mr. Homm a high priority.
Mr. Homm has not shunned the limelight since he rose to fame in the 1990s after he opened an investment attack on a German shipbuilder, Bremer Vulkan. It was a short-selling play — a bet that the share price would fall — and Mr. Homm profited enormously when the company went bankrupt, vaporizing thousands of jobs.Mr. Homm has not shunned the limelight since he rose to fame in the 1990s after he opened an investment attack on a German shipbuilder, Bremer Vulkan. It was a short-selling play — a bet that the share price would fall — and Mr. Homm profited enormously when the company went bankrupt, vaporizing thousands of jobs.
His fame grew in 2004 after he bought a stake in Borussia Dortmund, one of Germany’s most storied soccer teams. By Mr. Homm’s own account, he received death threats after he forced out much of the existing management and imposed ruthless cost cutting.His fame grew in 2004 after he bought a stake in Borussia Dortmund, one of Germany’s most storied soccer teams. By Mr. Homm’s own account, he received death threats after he forced out much of the existing management and imposed ruthless cost cutting.
Even incarceration in Italy has not stopped Mr. Homm, who has undergraduate and business degrees from Harvard, from trying to shape his public profile.Even incarceration in Italy has not stopped Mr. Homm, who has undergraduate and business degrees from Harvard, from trying to shape his public profile.
In his letter to The New York Times last year from a Pisa jail, Mr. Homm recalled how, shortly after his arrest at the Uffizi gallery in Florence, he was put in a cramped cell with a cocaine dealer, an armed robber and an accused murderer.In his letter to The New York Times last year from a Pisa jail, Mr. Homm recalled how, shortly after his arrest at the Uffizi gallery in Florence, he was put in a cramped cell with a cocaine dealer, an armed robber and an accused murderer.
This fearsome crew “received me with amazing hospitality and warmth,” Mr. Homm wrote. They gave him clean socks and underwear, he said, because he had nothing more than the clothes he was wearing at the time of his arrest. One cellmate explained life behind bars and protected Mr. Homm from other inmates.This fearsome crew “received me with amazing hospitality and warmth,” Mr. Homm wrote. They gave him clean socks and underwear, he said, because he had nothing more than the clothes he was wearing at the time of his arrest. One cellmate explained life behind bars and protected Mr. Homm from other inmates.
“I am grateful for this experience because I have come closer to God, our Mother and Jesus,” Mr. Homm said in the handwritten letter. “There is more godliness in this prison than in the world of money I have lived in for almost two decades.”“I am grateful for this experience because I have come closer to God, our Mother and Jesus,” Mr. Homm said in the handwritten letter. “There is more godliness in this prison than in the world of money I have lived in for almost two decades.”
A question is whether Mr. Homm’s piety will do him any good in court.A question is whether Mr. Homm’s piety will do him any good in court.
“If he can try to appear contrite in newspapers and the court of public opinion, maybe that filters through to the judge,” said Nancy Hoppock, a former prosecutor who is now the executive director of the Center on the Administration of Criminal Law at New York University. But she added, “When has that worked?”“If he can try to appear contrite in newspapers and the court of public opinion, maybe that filters through to the judge,” said Nancy Hoppock, a former prosecutor who is now the executive director of the Center on the Administration of Criminal Law at New York University. But she added, “When has that worked?”
Serious prison time could await Mr. Homm if he is convicted. He is accused of leading a scheme to defraud investors of his former hedge fund in the Cayman Islands, Absolute Capital Management Holdings, by manipulating 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 mixed martial arts fights.Serious prison time could await Mr. Homm if he is convicted. He is accused of leading a scheme to defraud investors of his former hedge fund in the Cayman Islands, Absolute Capital Management Holdings, by manipulating 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 mixed martial arts fights.
By trading the shares among entities that he controlled, including a broker in Los Angeles, prosecutors allege, Mr. Homm made his hedge fund appear more valuable than it was. That enabled him to increase the fees he charged his investors.By trading the shares among entities that he controlled, including a broker in Los Angeles, prosecutors allege, Mr. Homm made his hedge fund appear more valuable than it was. That enabled him to increase the fees he charged his investors.
The 10 criminal counts carry maximum sentences that could condemn Mr. Homm to spend the rest of his life in prison. He and other alleged 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 Management funds.The 10 criminal counts carry maximum sentences that could condemn Mr. Homm to spend the rest of his life in prison. He and other alleged 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 Management funds.
For all the self-criticism he piles on himself, Mr. Homm insists that his behavior was never criminal.For all the self-criticism he piles on himself, Mr. Homm insists that his behavior was never criminal.
“My behavior can be considered opportunistic and unethical,” he wrote in his autobiography. “However, whether my actions constituted criminal or civil fraud is an entirely different matter.”“My behavior can be considered opportunistic and unethical,” he wrote in his autobiography. “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 Management and led to accusations of self-dealing. “Nothing about my stake was secret,” Homm wrote in the book.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 Management and led to accusations of self-dealing. “Nothing about my stake was secret,” Homm wrote in the book.
He maintains that his trades in shares of small companies were also above board.He maintains that his trades in shares of small companies were also above board.
“Yes, I invested heavily in U.S. growth companies,” he wrote. “There was absolutely nothing illegal about that. We conformed to the investment restrictions spelled out in the investment prospectuses.”“Yes, I invested heavily in U.S. growth companies,” he wrote. “There was absolutely nothing illegal about that. We conformed to the investment restrictions spelled out in the investment prospectuses.”
Mr. Homm has promised that royalties from his book would go to a charity, the Liberia Renaissance Foundation, based in Zurich, which finances a school in West Africa. Pascal Frei, a volunteer member of the foundation’s board, said that Mr. Homm donated $600,000 to $800,000 help found the school in 2006, but that the organization had not heard from him since.Mr. Homm has promised that royalties from his book would go to a charity, the Liberia Renaissance Foundation, based in Zurich, which finances a school in West Africa. Pascal Frei, a volunteer member of the foundation’s board, said that Mr. Homm donated $600,000 to $800,000 help found the school in 2006, but that the organization had not heard from him since.
Franz Netter, a spokesman for FinanzBuch Verlag in Munich, which published the book, said the royalties — which he said were not large, but declined to specify — were being held in escrow because the publisher had not been authorized by Mr. Homm to pass them on to the charity.Franz Netter, a spokesman for FinanzBuch Verlag in Munich, which published the book, said the royalties — which he said were not large, but declined to specify — were being held in escrow because the publisher had not been authorized by Mr. Homm to pass them on to the charity.
Mr. Homm disappeared from his base on the Spanish island of Majorca in 2007 as the hedge fund was collapsing, by his own account flying away in a private plane and carrying $1.2 million in cash, some of it stuffed into his Calvin Klein underwear.Mr. Homm disappeared from his base on the Spanish island of Majorca in 2007 as the hedge fund was collapsing, by his own account flying away in a private plane and carrying $1.2 million in cash, some of it stuffed into his Calvin Klein underwear.
Still, he insisted that he was not a fugitive and in fact did not face criminal charges until last year. His arrest at the Uffizi Gallery, where he had gone to meet his teenage son and ex-wife, was a surprise. It came after he tentatively re-emerged from hiding with the publication of his book, and only days after he had appeared on a German talk show to debate capitalism with a hard-line leftist.Still, he insisted that he was not a fugitive and in fact did not face criminal charges until last year. His arrest at the Uffizi Gallery, where he had gone to meet his teenage son and ex-wife, was a surprise. It came after he tentatively re-emerged from hiding with the publication of his book, and only days after he had appeared on a German talk show to debate capitalism with a hard-line leftist.
“Total shock for me,” Mr. Homm wrote in his letter from jail. “Brutal shock for all others. I thought I could begin to live a more normal life.”“Total shock for me,” Mr. Homm wrote in his letter from jail. “Brutal shock for all others. I thought I could begin to live a more normal life.”
Gaia Pianigiani contributed reporting from Rome.Gaia Pianigiani contributed reporting from Rome.