Lars Windhorst is under investigation by criminal prosecutors

Berlin prosecutors have launched a criminal investigation into Lars Windhorst, the financier’s bonds at the heart of the H2O Asset Management crisis.

“The Berlin Public Prosecutor’s Office is investigating [Windhorst] Suspected of violating the German banking law,” the prosecutor told the Financial Times, adding that they took action after the financial regulator BaFin filed a criminal case.

BaFin declined to comment. People familiar with the matter said that regulators are concerned about the activities of Windhorst’s investment vehicle called Evergreen Funding.

Financial Times disclose In 2019, H2O, a 17 billion euro investment company, invested client funds in Windhorst-related illiquid bonds.French regulators last year Frozen a series of funds The “valuation uncertainty” of H2O on their large holdings of bonds.

Evergreen is as a Winhorst’s plan Repurchase assets that are difficult for H2O to sell. In June 2020, Evergreen issued 1.25 billion euros of bonds, attracting investors with an annual interest rate of 12.5%.

However, the 2020 annual accounts of the Luxembourg-based car company show that it provided Windhorst with high-interest loans worth 272 million euros and only held 263.5 million euros in bonds on its balance sheet.

People familiar with the matter told the Financial Times that BaFin suspected that Evergreen might engage in banking activities such as deposits and loans without the necessary permits.

BaFin subsequently froze Evergreen’s bank account in Germany and notified the criminal prosecutor in Berlin that Windhorst’s Tennor Holding Company had an office in Berlin. According to German law, it is a criminal offence to conduct banking business without permission, with a maximum sentence of five years in prison.

A Windhorst spokesperson said: “We are absolutely certain that these allegations are unfounded because neither Evergreen Funding nor any company in the group is engaged in regulated banking activities,” adding that all Evergreen bonds have been fully repaid, including interest.

He added that the loans listed in the account were originally granted to Tennor Holding and later transferred to Windhorst to be used to repurchase bonds.

Middle-class parents born in Laden, Windhorst, in 1976 Become famous in one fell swoop As a precocious young entrepreneur, he was hailed as a child prodigy by the then German Chancellor Helmut Kohl. But by the age of 34, Windhorst had withstood the closure of two companies, personal bankruptcy and probation.

After being convicted of “violating a trust” in 2010, the German financier moved to London and began to participate in a series of Complex financial transactions Involving illiquid debt securities.Several of these transactions resulted in litigation, Including billionaire Len Blavatnik and Former Minister of Energy of Russia.

Despite facing legal issues, Winhorst continues its crazy pace of transactions, most notably Buy shares In 2019 at the German football club Hertha Berlin.He recently Join twitter In order to refute the criticism, he pointed out that “There are always reports about my company and me, and I cannot and will not refrain from commenting.”

H2O still holds more than 1 billion euros in hard-to-sell assets related to Windhorst and its Tennor group of companies. After French regulators forced H2O to temporarily freeze its funds last fall, asset management companies isolated troublesome securities into the “side pockets” of major funds, from which investors could not redeem them.

The commotion led to the French bank Natixis Sell ​​majority stake In H2O, cut off the connection with the once high-profit asset management department.

H2O declined to comment.

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