Frankfurt Prosecutors Arrest Six in Ponzi Scheme ProbeKarin Matussek
Frankfurt prosecutors conducted about 130 raids in Germany that resulted in six arrests as part of a probe into a Ponzi scheme they say resulted in losses for about 1,000 investors.
About 1,200 officers raided locations in seven German states today and more than 100 million euros ($134 million) was frozen, prosecution spokeswoman Doris Moeller-Scheu said in an e-mailed statement. The case centers on real-estate investment company Deutsche S&K Sachwert AG, she added, without identifying any of the approximately 50 suspects.
Losses may total in the hundreds of millions of euros as investors “sought a new profitable and safe investment possibility in the wake of the 2008 financial crisis,” Moeller-Scheu said.
Germany has intensified investigations into investor fraud. In Munich last year, prosecutors led raids targeting stock manipulators and won convictions on a scheme where small investors were duped using a stock-exchange newsletter. In 2011, a Wuerzburg court sentenced K1 Group founder Helmut Kiener to 10 years and eight months in jail for cheating investors in a 345 million-euro Ponzi scheme.
Efforts to reach S+K by phone were unsuccessful and the company didn’t immediately respond to an e-mail seeking comment.
In a Ponzi scheme, money from new clients is used to pay off old ones rather than being invested.