Fugitive hedge fund manager arrested in Italy

  • A German hedge fund manager, who had been a fugitive for more than five years, was arrested in Italy on Friday.

    Florian Homm, 53, the founder and chief investment officer of Absolute Capital Management Holdings, is accused of masterminding a market manipulation scheme to artificially improve the performance of his funds in the United States.

    The fraud scheme led to around $200 million in losses to investors.

    He was arrested at the Uffizi Gallery art museum in Florence.

    According to a criminal complaint filed in U.S. District Court in Los Angeles, Homm directed the hedge funds to buy billions of shares of U.S.-based penny stocks, which were then traded among themselves to inflate prices as well as the funds' asset values.

    The stock purchases were made through Hunter World Inc, a broker-dealer in Los Angeles co-owned by Homm.

    Absolute Capital, based in the Cayman Islands, managed nine hedge funds from 2004 to September 2007.

    Homm faces four felony charges: conspiracy to commit wire fraud, wire fraud, conspiracy to commit securities fraud, and securities fraud.