One week later a letter, delivered by courier, landed on the desk of Ulrich Weiss, a member of the board of Deutsche Bank, which, as the Schneider group's biggest creditor, is owed more than 2 billion German marks ( pounds 813m).
In it, Mr Schneider said that his doctors had ordered him to relinquish all business responsibilities immediately on health grounds. He complained that banks were squeezing his businesses, asked Deutsche Bank for a new bridging loan to cover temporary difficulties, and suggested that it might help to run the group's affairs in his absence. He regretted that he could not reveal his location, again on medical advice to avoid stress.
Only belatedly did the bank realise that, of the DM550m in fixed cash deposits that the property tycoon habitually brandished as proof of his financial soundness, in order to coax new loans, some DM300m had been removed in the previous few months.
While Germany's self-styled property Kaiser nurses his stressed nerves at some unknown location - one report had him reclining under palm trees on a small island off Florida - the banks that once feted him are staring grimly at one of Germany's most spectacular business failures - and outstanding debts of more than DM5bn.
On building sites in big cities across the country, panicked tradesmen are trying to save what they can, ripping out newly installed doors, windows and radiators. The government in Bonn, mindful of rising unemployment and the general election in October, has taken the unusual step of warning the big banks not to let the countless small subcontractors of the Schneider group go to the wall.
In an atmosphere rank with accusations of criminal negligence against the banks and fraud against the fugitive Mr Schneider, the state prosecutor, the Federal Criminal Office and Interpol have begun their investigations.
Germany's banks are scrambling to save their reputations. Only months after they were forced to find DM3.4bn to rescue the huge industrial concern Metallgesellschaft from the brink of bankruptcy, they have gathered indecorously for an emergency creditors' meeting in Frankfurt to survey the wreckage of this second massive collapse.
None of this should have happened. Speculation and collapse are considered to be the congenital defects of the Anglo-Saxon species, totally foreign to a Teutonic environment carefully constructed on solid pillars of security and long-term protective relationships, and where risk has long been excised from the body economic.
The troubles that rocked the property empires of Donald Trump and the Canadian Reichmann brothers of Canary Wharf notoriety prompted knowing nods in Germany, and comments such as: 'Well, it was bound to happen over there, wasn't it? Of course, here, it simply couldn't . . .' Now, it has, and on a panoramic scale.
As the Deutsche Bank absorbed the shock of Mr Schneider's letter, senior bank officials sped to the Schneider group's headquarters to do what they had neglected to do in all the years that they were thrusting billions of marks into the suave property tycoon's outstretched hands: go through the books.
They quickly found that behind the highly inflated values and earnings forecasts, there yawned a big hole. And only then did the bank dispatch someone to look over Les Facettes, Mr Schneider's futuristic temple to consumption on Frankfurt's main shopping street, built a year and a half ago, just a five- minute walk from Deutsche's skyscraper headquarters.
Instead of the 20,000 square metres of retail space claimed by Mr Schneider, there are 9,000; and instead of DM57m in forecast rental earnings, they calculated DM8m. Deutsche Bank lent DM415m for the project, but failed to perform the routine checks that it would impose on a mortgage customer buying a two-bedroomed flat.
A few days later, Deutsche launched a fraud complaint against Mr Schneider with the Frankfurt state prosecutors' office. This belated step, however, did nothing to staunch that howls of criticism that the banks had indiscriminately handed money to big clients while screwing the little man with high interest rates, stingy loans and excessive collateral demands.
The public's anger has been exacerbated by assurances from the main creditor banks, in an effort to calm nervous financial markets, that the DM5bn Schneider debt is largely covered by claims on the group's 80-odd properties. This gave the impression that the hundreds of small trade creditors would be left in the cold.
'The banks are criminally neglecting their supervisory duties, and are foolishly giving undeserved preferential treatment to major customers,' thundered Klaus Bregger, head of the small- and medium-sized business association that is linked to Chancellor Helmut Kohl's Christian Democratic party.
The banks' initial confidence about getting their money back has quickly evaporated. Instead of the DM3.7bn net value for the properties claimed by Mr Schneider's friendly accountants, closer bank inspection suggests negative equity of DM2bn.
One by one, the group's subsidiaries have filed for bankruptcy. None of them held the titles to any of the properties; behind a complex legal web, the deeds were firmly in the hands of Mr and Mrs Schneider. Finally, Deutsche Bank has launched bankruptcy proceedings against the couple themselves.
As a qualified construction engineer, Mr Schneider had quietly begun to build up his property business in 1981. But it was only with the fall of the Berlin Wall in 1989 that his name hit the headlines as he raced to snap up some of the finest city-centre properties in eastern Germany.
A few banks took fright at his aggressive business style and cut all ties, but most continued to stoke his ambitions with loans, well after the property boom had petered out and the recession had driven down occupancies and rents.
Mr Schneider, his carefree toupee apart, was a man of great charm, who cultivated politicians and bankers. Few would deny that he erected fine buildings and conducted elegant restorations. Cost was no object, as his banks later discovered.
Masterfully he spun an ever larger wheel of loans to buy properties, which were restored and mortgaged to acquire new properties. But he was breaking the developer's golden rule: he almost never sold, bought over the odds and built up a massive collection of exclusive buildings - and debts. For years, other developers wondered how he did it.
As the recession dragged on, it became harder and harder to turn the big-loan wheel. And in the end, it all became too stressful for Mr Schneider. Armed with a few hundred million marks, he has decided to take a low- profile break.
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