Germans Applaud Arrest of Tycoon : Europe: Real estate mogul nabbed in U.S. a year after empire collapsed. Debts totaled $3.5 billion.
Germans rejoiced Friday at the news that fugitive real estate baron Juergen Schneider had been arrested Thursday in a suburb of Miami.
His capture, following a hunt that lasted more than a year, raised hopes that the man behind one of modern Germany’s most spectacular business collapses would eventually be brought home to justice.
“We’re holding out the hope that finally, through Schneider, all of the small construction businesses and workers [whom Schneider never paid] will get their money,” construction workers union spokesman Werner Koehler said.
Schneider, now 61, vanished in April, 1994, leaving a castle-like headquarters, debts totaling $3.5 billion and a note claiming that he was ill and under doctor’s orders to retire immediately.
He is expected to be extradited to Germany, where Deutsche Bank, his biggest creditor with 1.2 billion marks worth of bad loans--more than $800 million--has accused him of conducting his business affairs with “criminal energy.”
Schneider faces a 10-year jail term if convicted of defrauding his many bankers, contractors and suppliers. But legal experts are already warning that extradition could take as long as six months and a trial is probably at least a year off.
Before his real estate empire sank in a sea of debt, Schneider had made himself a legend in Germany by buying up cheap properties and turning them into prestigious office buildings, luxury hotels and fashionable shopping malls.
He found many of his bargains in the former East Germany after the fall of the Berlin Wall, and some of the creditors he left empty-handed were young eastern companies just getting their first taste of life in a capitalist economy.
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Their bitterness was intensified because Schneider had at first been portrayed as a hero who was rebuilding the decrepit East, investing money and creating much-needed jobs. Although other business failures have been larger in dollar terms, few have stirred the passions of the Schneider affair.
Much of the public wrath has been directed at his bankers, who lent the overextended developer millions of marks without scrutinizing how the money was being used. Regulators say they warned lenders that Schneider was amassing dangerous levels of debt but their warnings went unheeded.
In one highly publicized instance, Hilmar Kopper, Deutsche Bank’s powerful chairman, earned public revulsion by remarking on German television that the losses incurred by small businesses when Schneider disappeared amounted, in his view, to mere “peanuts.”
As with several other giant developers whose empires collapsed in the 1980s, Schneider built his business by buying properties and improving them, then using their value as collateral to take out new loans for more purchases. At the time of his empire’s collapse, he owned 168 buildings in 14 German cities, including Frankfurt’s most popular shopping mall and the Madler-Passage in Leipzig, home to a historic drinking establishment featured in Goethe’s “Faust.”
Schneider’s borrow-and-buy cycle could not be sustained when the German economy cooled and real estate prices fell. But investigators say his failure went well beyond innocent overextension and that he tricked banks into lending him money by faking rental contracts and forging blueprints in ways that substantially overstated the value of his holdings.
German police said Friday that they had located the runaway tycoon by tracking a courier who had been shuttling between him and his lawyer in Geneva. Until they found the courier, they said, they had been following 100 leads.
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The trail got hot earlier this week, when the courier delivered a videotape to the Swiss lawyer in which Schneider protested his innocence, claimed to be “an ordinary bank customer” and blamed his “monstrous” bankers for ruining him.
Parts of the tape were aired on German television, giving the public the first evidence that Schneider was still alive; rumors had circulated that Schneider was either dead or living in Florida, Iran, Switzerland or on a yacht.
After the courier dropped off the video, police followed him back to Miami and to Schneider. The two were parked in front of a bank when FBI agents--working with German and Swiss authorities--arrested him. His wife, Claudia, was arrested an hour later at their apartment.
