Managing director of BVI hedge funds arrested in connection with K1 Group’s probe

Two more arrests were made in connection with investigation of K1 Group’s activities. According to Dietrich Geuder, the spokesman for the Wuerzburg Prosecutors’ Office, the managing director of the British Virgin Islands-based hedge funds K1 Global Ltd. and K1 Invest Ltd., as well as the managing director of a trustee company were arrested.
Mr. Geuder said that the German investigation has shown that these BVI companies were Ponzi schemes which were not intended to make profits, but through which, as prosecutors suspect, investors lost more than 90 million euros.
The assets of K1 Invest Ltd., one of the two BVI funds believed to be used in a network of investment firms to transfer the money received from reputable banks including  Barclays Plc, JPMorgan Chase & Co. and BNP Paribas SA, were frozen in the end of 2009. Both K1 Invest and K1 Global filed for liquidation.
For some months, K1 Group is at the center of an international criminal probe. European and U.S. authorities are seeking information about whether K1 founder Helmut Kiener, who also managed the funds of the BVI hedge funds, used his business relations to the above-named banks to channel their money to K1 Invest and K1 Global through a net of funds and sham companies.