German Tycoon Gets Nearly 7 Years for Fraud

Disgraced property tycoon Juergen Schneider was convicted of fraud and sentenced to six years and nine months in jail by a Frankfurt court Tuesday in Germany’s biggest case of corporate deceit since World War II.

But Judge Heinrich Gehrke granted the 63-year-old’s wish to spend Christmas at home with his family, saying he saw no risk of Schneider fleeing the country.

Gehrke also lambasted Schneider’s creditor banks for “unfathomable recklessness” in lending him billions of marks without conducting proper checks.

The banks’ failing encouraged Schneider to dupe them and was one reason his sentence was more lenient than the term of almost eight years the prosecution had demanded, Gehrke said.

“The banks ignored warning signs the size of a barn door and let nothing stop them [from making] their expected profit,” Gehrke said in a two-hour explanation of the verdict.

Taking into account 32 months already spent in custody, Schneider, once Germany’s most celebrated building magnate, is likely to be released in less than two years, the judge said.

During the six-month trial, Schneider had shown he was not so much a hard-boiled criminal as he was a workaholic obsessed with impressing his father and refurbishing buildings to the highest standards, whatever the cost. Schneider specialized in top-quality refurbishments of historic hotels and stylish shopping malls that added flair to city centers across the country.

“We are quietly pleased,” one of Schneider’s lawyers, Heinz Salditt, told a news conference after the sentencing.

Arrested in Miami in 1995 after evading police for more than a year, Schneider was convicted on five counts of fraud and document forgery involving properties in Berlin, Frankfurt and Leipzig.

The collapse of his empire under more than $2.8 billion of debt in 1994 rocked the real estate market, threatened the livelihoods of hundreds of builders and exposed banks to public outrage at the ease with which they were duped.

Gehrke said the lenders, Deutsche Bank, Dresdner Bank, BHF-Bank, Bau-und Bodenbank and Norddeutsche Landesbank, had been blinded by Schneider’s initial success, apparent wealth and haughty manner into extending billions of marks of credit.