German Ponzi man jailed after ripping off Barclays

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The Independent Online

Germany's version of Bernard Madoff was sentenced to 10 years in prison yesterday for running a Ponzi scheme that defrauded Barclays and other investors out of €345m (£304m).

Helmut Kiener, the founder of the K1 fund, was found guilty of fraud, forgery and tax evasion after spending tens of millions of investors' money on luxury real estate, cars and planes.

The prosecution said Barclays lost €171m and BNP Paribas lost €52m with small investors incurring the rest.

In the run-up to the trial, Kiener said he would expose his clients' "greed" and that banks should have known what they were getting into. Yesterday he said: "My problem was that I didn't have the courage to end it all earlier. Now I have to pay for it."

Kiener, right, launched K1 in 1995 while working as an advertising salesman and convinced banks and small investors that he could produce super-profits.

K1 claimed returns of 849 per cent from 1996 to 2009. Like Madoff, whose $65bn (£40bn) Ponzi scheme was the world's biggest, Kiener paid out to established investors using new clients' funds while running huge losses to fund his own extravagant lifestyle.

In a story likened by a lawyer for investors as akin to "a really bad B movie", the ex-manager of two of Kiener's funds, Dieter Frerichs, killed himself last year to avoid arrest on Majorca.

K1's accountant, identified in court as Claud Z, was jailed for three years and nine months for aiding Kiener.