German hedge fund manager Florian Homm, who had been a fugitive for more than five years, was arrested in Italy on U.S. fraud charges, according to a statement from the U.S. Attorney's office in Los Angeles. Homm, 53, the founder and chief investment officer of Absolute Capital Management Holdings Ltd, is accused of orchestrating a market manipulation scheme to artificially improve the performance of his funds, a fraud that led to at least $200 million in losses to investors. He was arrested Friday at the Uffizi Gallery art museum in Florence. An attorney for Homm could not immediately be reached for comment. Absolute Capital, based in the Cayman Islands, managed nine hedge funds from 2004 to September 2007. The criminal complaint filed in U.S. District Court in Los Angeles alleges that Homm directed the hedge funds to buy billions of shares of U.S.-based penny stocks and trade them among themselves to inflate their prices and the funds' asset values while generating additional fees
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