K1 Group founder Helmut Kiener, who was convicted in Germany of defrauding investors in a Ponzi scheme, was indicted by the U.S. for his role in a $311 million fraud, the U.S. Attorney in Philadelphia said. Kiener, a German national, is charged with four counts of wire fraud, two counts of bank fraud and three counts of money laundering based on allegations he devised a scheme to defraud Bear Stearns Cos. using hedge funds in the Bahamas and the Cayman Islands. Kiener’s partner John Tausche, 61, of Blowing Rock, North Carolina, was charged by information with one count of bank fraud and one count of money laundering. Kiener, 53, was convicted in 2011 and sentenced to 10 years and eight months in prison after confessing to using new investors’ money to make up for losses in the wake of the financial crisis. K1’s funds are being liquidated in the British Virgin Islands. Kiener’s personal assets were placed in insolvency proceedings in Germany.
Between March 2005 and December 2008, Kiener and Tausche allegedly funneled investment funds from Bear Stearns through the Oceanus Funds, an entity controlled by Tausche to give the impression that the investments were growing in size, according to today’s indictment…If convicted, Kiener faces a maximum of 200 years in prison and a maximum possible fine of $7.9 million. Tausche faces a maximum of 40 years in prison and a fine of $1.9 million.