|Published: 8:28 AM, 02/14/2013
||Last updated: 8:35 AM, 02/14/2013
Source: The Blowing Rocket
A Blowing Rock man was indicted Thursday on charges of bank
fraud and money laundering after allegations that he and an associate in Germany defrauded investors
of more than $311 million.
Investigators believe John C. Tausche, 61, of Blowing Rock, and
Helmut Kiener, 53, of Aschaffenburg, Germany, devised and directed various investment fraud schemes,
according to the U.S. Attorney’s Office in Philadelphia.
Kiener, a German national,
controlled several hedge funds, including K1 Global Limited and K1 Invest. Tausche controlled
several offshore hedge funds collectively called the Oceanus Funds, according to the U.S. Attorney’s
Between March 2005 and December 2008, Kiener allegedly created a scheme to defraud
Bear Stearns by informing the New York investment company that its funds would be diversified and
independently managed, according to the charges.
But Kiener actually funneled Bear Stearns’
money from K1 through the Oceanus Funds and back to K1 to give the false impression that the funds
were growing and were viable investments, the indictment states.
Investigators believe that
Kiener and Tausche intentionally created the appearance that the K1 funds were growing in value by
providing false and misleading information to Bear Stearns.
As a result of the scheme,
Kiener earned sales agent fees while Bear Stearns invested and lost about $82 million.
Stearns collapsed and was sold to JP Morgan Chase in 2008.
The information filed against
Tausche alleges a similar scheme against Barclays Bank that resulted in losses of $137 million to
Investigators also believe that starting in 2007, Barclays Bank, Bear Stearns and
BNP Paribas invested more than $100 million with Kiener in two offshore funds called Consistent
Return Ltd. and Mezzanine Financing Ltd. Kiener maintained that both were legitimate investment
funds while actually directing a third party to create the funds, according to the U.S. Attorney’s
Kiener then used the money for his own purchases, including an oceanfront property
valued at $21 million in Delray Beach, Fla.; a Bombardier executive jet; a Bell helicopter; Bentley,
Mercedes and Maybach vehicles; two luxury watercraft; and more than $8 million in upgrades to his
real estate, the U.S. Attorney’s Office said.
Kiener was charged with four counts of wire
fraud, two counts of bank fraud and three counts of money laundering, according to a news
Tausche is charged with one count of bank fraud and one count of money laundering,
according to investigators.
If convicted, Kiener faces a maximum possible sentence of 200
years in prison, restitution, and a maximum fine of $7.936 million.
Tausche faces a maximum
possible sentence of 40 years in prison, restitution, and a maximum fine of $1.974
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