Homm’s trip to Italy allowed U.S. prosecutors to seek his arrest, said Otto Lagodny, a professor of comparative criminal law at Salzburg University. The German constitution bars the extradition of citizens to countries outside the European Union, so Homm would have been safe in his home country.
‘Only Speculate’
“I’m sure his lawyers explained that to him and he must have chosen to take that risk nevertheless,” said Lagodny, who isn’t involved in the case. “You can only speculate about his motives.”
According to the FBI affidavit, Homm’s scheme began unravelling in April 2006 when an unidentified former Absolute Capital employee sent an anonymous e-mail to media and investors providing details of stock manipulation by the hedge funds.
Homm and Absolute Capital’s Chief Executive Officer Sean Ewing traced the e-mail to the sender in the U.S., identified only as D.P.P. in the affidavit. The sender was intimidated into writing a retraction letter to the recipients of his e-mail, according to the affidavit.
‘Mob’ Ties
D.P.P. felt threatened because, when he still worked at Absolute Capital, Homm had told him that he “had ties to a mob family in Frankfurt” and would kill D.P.P. if he ever betrayed him, according to the affidavit.
Homm had started to unload his Absolute Capital shares at an inflated price, before he left in 2007 and the share price plummeted, according to the FBI. He collected about $40 million from the sale of his stock, the FBI said.
According to the SEC’s lawsuit filed in February 2011, Homm and the other co-owner of Beverly Hills, California-based Hunter World Markets Inc., the broker-dealer through which funds controlled by Homm bought the microcap companies’ shares, engaged in “portfolio pumping.”
Homm and his co-defendants in the lawsuit brought microcap companies public through reverse mergers and manipulated the companies’ share prices upward before selling the shares to eight Absolute Capital funds, according to the SEC. Homm ran the alleged scheme from September 2005 to September 2007, the agency said.