USDOJ Indicts Blowing Rock Man Yesterday For Involvement in $311M Hedge Fund Scheme

Published Friday, February 8, 2013 at 11:42 am

By Jesse Wood

Feb. 8, 2013. The U.S. District Attorney’s Office in Philadelphia indicted two business associates – a man listed as being from Blowing Rock and a German national – on Thursday for their involvement in a hedge fund scheme that swindled institutional investors out of $311 million.imgres-1

Helmut Kiener, a 53-year-old German native who controlled several hedge funds including K1 Global Limited and K1 Invest, was indicted on four counts of wire fraud, two counts of bank fraud and three counts of money laundering.

Kiener was aided and abetted in the various investment fraud schemes that he devised and directed by John “Jay” Tausche, 61, who has been residing in Blowing Rock recently and was charged with one count of bank fraud and one count of money laundering.

Tausche owned and operated a financial consulting business located in Wichita, Kan., called Oceanus Funds, through which he established and controlled certain hedge funds that were based in the Bahamas and marketed to international investors, according to court documents. 

The indictment alleges that between 2005 and 2008, Tausche and Kiener funneled funds from Barclays Bank, Bear Stearns and the European-based BNP Paribas to each other to knowingly give the impression that funds were increasing in value and repeatedly and falsely representing that the funds were diversified and independently managed, according to the U.S. District Attorney’s Office in Philadelphia. 

Bear Stearns, which is now owned by JPMorgan Chase, lost approximately $82 million. Barclays Bank lost $137 million. Information filed also alleges that Kiener represented two other offshore funds – Consistent Return Ltd. and Mezzanine Financing Ltd. – as being legitimate investment accounts and swindled another $100 million from the three institutional investors that was used for Kiener’s own purposes including:

  • oceanfront real estate in Delray Beach, Florida valued at over $21 million;
  • a Bombardier executive jet; a Bell helicopter;
  • luxury cars such as a Bentley, a Mercedes and a Maybach;
  • two luxury watercraft;
  • and over $8 million in upgrades to his real estate

If convicted of all charges, Kiener faces a maximum of 200 years in prison, restitution, and a maximum fine of $7.936 million while Tausche faces a maximum of 40 years in prison, restitution, and a maximum possible fine of $1.974 million.

On Friday morning, the incident has been the talk about town. A Blowing Rock official requesting anonymity because he wasn’t too familiar with Tausche, said that everyone in town is surprised. Initially, Tausche lived in New York City and Wichita, Kan. 

“Recently, he’s lived here quietly [with relatives],” the Blowing Rock official said. “This was a surprise.” 

Tausche’s attorney Joseph Grimes was quoted in Bloomberg as saying Tausche is “cooperating with authorities.”

Correction: A previous version of this story stated that John Tausche once lived in Key West. This was incorrect. Jay Tausche never lived there; he has resided, as the current version reflects, in New York City and Wichita, Kan. High Country Press apologizes for this error. 

John Tausche’s brother Ed lives in Blowing Rock. Ed Tausche and his immediate family (wife and kids) are the only Tausche family in town – and they moved to the High Country from Key West. Ed Tausche, a building contractor and upstanding citizen, was helping out his brother during tough times by allowing John to stay in his family’s home. Although High Country Press’ original story noted that John Tausche was staying with relatives in Blowing Rock, Ed Tausche asked for a clarification: Jay Tausche is not Ed Tausche.

Comments

comments

Privacy Policy | Rights & Permissions | Discussion Guidelines

Website Management by Outer Banks Media