US: Hathaway gets smart

Raffaello Follieri is most ofted described as "an Italian businessman." But it seems he's not very good at business - and also appears to have extensive interests in the US.

Which is in some ways unfortunate because the US seems to have quite a lot of interest in him.

In 2007, his company Follieri Group LLC was sued by multi-millionaire Ron Burkle's Yucaipa Cos who alleged that Follieri misused more than a million dollars out of a fund of more than USD55 million which was a joint venture with one of Yucaipa's managed funds. It is alleged that he spent the money on a lavish lifestyle including private jets, a penthouse and transatlantic trips with Hathaway.

Earlier this year, he was arrested but later released in relation to a bounced cheque for more than USD200,000 - but it was subsequently covered. At the same time allegations arose that he had failed to pay his public relations company.

This month, he was sued by American Express Bank for a smidgeon under half a million dollars in unpaid credit card bills - he has allegedly not paid since September last year and a judgment was entered in default of his appearance in that action. But in criminal Court last week Follieri shouted out "We paid all that."

But it's the most recent case that really beggars belief: he has romped around the USA promoting an investment scheme predicated on his claims that he has agreed a deal with the Vatican to have first refusal on all property in the US should the Vatican decide to divest itself of any of its substantial holdings.

Follieri targeted an unamed "principal investor."

But the alleged representations were not true. According to the FBI's Theorore Cacioppi, "In reality, Follieri and those working for him submitted bids for the purchase of properties in the United States like any third-party investor, and often did not pay below the fair market value.''

Follieri's bail conditions include that he does not leave his Trump Towers flat except for medical, legal and religious reasons and even then he is not permitted to leave Manhattan. Asst. US Attorney Reed Brosky argued against bail saying "He has expertise in hiding and concealing money." And yes, he did use "hiding" and "concealing" in the same sentence - perhaps in a ham-fisted attempt to address the problems facing Federal Prosecutors after the Cuellar case earlier this month.

Follieri was arrested in possession of a brief case containing some USD15,000 - and found to have a bank account with around euro10 million. He also, Brodsky said, "tested positive for opiates."

The Vatican-related scheme allegedly ran from 2005 to 2007. Follieri allegedly spent the money on renting a flat overlooking Central Park - costing USD37,000 per month. He spent vast amounts, say the FBI, on "flowers, cosmetics, clothes, wine, expensive dinners, dog walking services and orthodontis expenses."

He is charged with 12 counts of conspiracy, mail fraud and money laundering.

Interestingly, those are usually make-weight charges added to indictments in the USA, often to be negotiated away as part of a plea bargain. It is rare for them to constitute the entire indictment, suggesting that they are currently "holding charges" and that more offences are likely to be added after further investigation.

And that raises the spectre of Anne Hathaway having to surrender gifts from Follieri if it is proved that he has commited an offence. It's got nothing to do with whether she knew or suspected or had reason to suspect that the gifts were derived from proceeds of crime - it's a no-fault recovery of tainted assets. As such there is no implication that she was involved in concealing the ownership or any other money laundering related offence.