New York (HedgeCo.Net) – Florian Wilhelm Jürgen Homm, a German hedge fund manager who was on the run for more than five years, is wanted by the FBI for his alleged involvement in a market manipulation scheme designed to artificially improve the performance of eight Cayman Islands-based hedge funds managed by Absolute Capital Management Holding Limited. The fraud led to at least $200 million in losses to investors around the world, the FBI alleges.
Homm was arrested in Italy last year by Italian authorities. While extradition procedures were pending, Homm was released and fled to Germany in June of 2014.
Homm was the founder and chief investment officer of Absolute Capital Management Holdings Limited, a Cayman Islands-based investment advisor that managed nine hedge funds from 2004 until September 2007. The criminal complaint filed in United States District Court in Los Angeles alleges that Homm directed the hedge funds to buy billions of shares of thinly traded, United States-based “penny stocks.” Homm caused many of the purchases of penny stocks to be made through Hunter World Markets Inc., a broker-dealer in Los Angeles that Homm co-owned. Homm also allegedly obtained shares of the penny stock companies through various businesses he controlled.
After the hedge funds invested hundreds of millions of dollars in the illiquid penny stocks, Homm caused the hedge funds to trade the stocks among themselves in “cross-trades” made through the Los Angeles-based broker dealer. As part of the stock manipulation scheme, Homm and others allegedly sold their own shares of the penny stocks to the hedge funds managed by Homm. The cross-trades served to increase the trading prices of the previously illiquid stocks and, in turn, to boost the net asset values and apparent performance of the hedge funds. This apparent performance improvement at the hedge funds generated additional fees for Homm and Absolute Capital, as well as boosting Absolute Capital’s stock price on the London Stock Exchange, Alternative Investment Market.
Folllowing allegations made by a “whistleblower” in 2006, Homm also dumped tens of millions of dollars’ worth of his own shares in Absolute Capital prior to resigning from the firm in the middle of the night on September 18, 2007. The allegedly fraudulent conduct caused at least $200 million in losses to investors in the hedge funds. The scheme allegedly netted Homm and his co-schemers more than $53 million via trades made through Hunter World Markets alone.
Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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