German found guilty of insider trading
A German internet entrepreneur received a 20-month suspended sentence and a €100,000 fine after being found guilty of insider trading.
German prosecutors said Mr Kim Schmitz, 28, used insider information to manipulate the share price of troubled internet trader LetsBuyIt.com.
After the company ran into financial difficulties last year, Mr Schmitz met company executives and announced a rescue plan.
His company, Kimpire, would invest €1.1 million initially in the company, with the promise of up to €50 million over the following 12 months.
Shortly before making his bid, Mr Schmitz bought €375,000 worth of the LetsBuyIt shares. News of the rescue bid sent LetsBuyIt shares through the roof, tripling in value in one day.
Shortly afterwards, Mr Schmitz secretly sold the shares, pocketing €1.2 million, and abandoned his rescue plan.
After an investment magazine broke the story, investigators issued an arrest warrant but Mr Schmitz fled to Thailand.
He was arrested and extradited from Thailand last January and has been in custody in Munich ever since.
Mr Schmitz, who faced 11 counts of insider trading, denied the charges yesterday. He said he was the victim of a "witch-hunt" and that his dealings with LetsBuyIt shares were completely legal.
"I bought the shares completely openly through the bank," he said, reading from a written statement. He said he "never expected" the shares to rocket in value.
He admitted yesterday he never had the €50 million he promised to invest in LetsBuyIt.com.
"I lied to the faces of journalists," he said.
Mr Schmitz sold the shares because of liquidity problems, he said, and fled to Thailand not to escape prosecution but his own creditors.
The trial generated huge media interest in Germany as Mr Schmitz, a shameless self-promoter and an extravagant party-giver, was one of the leading lights of Germany's dotcom scene.
At the peak of the new economy stock craze, Mr Schmitz described his company, Kimvestor, which was then worth €200 million, as a "start-up factory, where we develop new technologies to generate new businesses with completely new business models every time".
What dazzled investors back then now reads like typical new economy non-speak.
Mr Schmitz, who named himself King Kimble after the lead character in The Fugitive, said in court yesterday: "All I now possess in the world is my prison cell in Munich."