A German financial manager based in Miami was arrested on money-laundering charges Wednesday as part of a sweeping criminal investigation into an international hedge fund that has cost major banks about $400 million in losses, according to sources familiar with the probe.
Stefan R. Seuss, arrested at his Coconut Grove home by FBI agents, appeared in federal court in Miami and agreed to be transferred to Philadelphia, where a grand jury has indicted him in the money-laundering conspiracy case.
Seuss has been charged in connection with a global criminal investigation into the German hedge fund, K1 Group, headed by Helmut Kiener, according to sources familiar with case. Kiener's home in Germany was raided by authorities Wednesday.
Kiener's hedge fund is suspected of engaging in "circular transactions" with a network of investment firms in the United States, United Kingdom and other countries to create the "illusion" that it had ample money to back up loans from the banks, according to Bloomberg News.
Among the reported banks saddled with huge losses: Barclays, JPMorgan Chase & Co. and BNP Paribas.
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