Court drops case against fugitive financier 12 years after default judgment

A Los Angeles judge vacated a default judgment and dismissed a 2008 civil case against fugitive German financier Florian Homm about 12 years after he was indicted by a federal grand jury in Los Angeles on 10 counts of securities fraud in a $200 million portfolio pumping scheme.

In the civil case, investors obtained the default judgment on Jan. 6, 2012 in a lawsuit accusing him of fraud in connection with an offshore hedge fund a year before he was arrested at the Uffizi Gallery in Florence, Italy in 2013 on a federal warrant. He had "abruptly resigned from the firm in the middle of the night" in 2007, fled his home in Spain and remained on the run for more than five years, the U.S. Department of Justice said in a news release.

"He was ordered extradited by the Italian Ministry of Justice, but Homm ultimately was released," said the DOJ. Homm now lives in Germany, according to Jan Handzlik, the attorney who began representing him at that time and succeeded in getting the default and civil case dismissed this January.

Referred to in financial news outlets as the "antichrist of finance" and by his hedge fund manager as "a cross between Einstein and Mike Tyson," Homm described fleeing from Spain with cash in his underwear and traveling to Colombia with a new identify in his memoir, "Rogue Financier - Adventures of an Estranged Capitalist."

Plaintiff Pricaspian Development Corp. and the late Denver oil tycoon Jack J. Grynberg quoted excerpts from the memoir in their lawsuit against Homm and his business entities in 2008. They claimed fraud, constructive trust, unjust enrichment, conversion and racketeering. Pricaspian said it had invested about $12 million in offshore hedge funds managed by Homm's Absolute Capital Funds.

Reports had emerged that Homm invested about half a billion dollars in penny stocks contrary to the funds' written provisions, and investors were looking at steep losses, according to the Department of Justice. Pricaspian and Grynberg also claimed that the penny stocks were acquired from defendant Hunter World Markets, of which Homm was secretly half-owner, and that he profited from the transactions. Jack J. Grynberg, et al. v. Todd M. Ficeto, et al., BC396756 (L.A. Super. Ct., filed Aug. 21, 2008).

When Pricaspian obtained the default judgment against Homm in January 2012 he did not have any assets in the United States. Pricaspian initiated proceedings to domesticate the judgment in Germany in June 2015 and courts there affirmed that the judgment was enforceable.

Handzlik said in an email this week, "Mr. Homm was advised by the lawyer representing him [in Germany] that there was nothing he could do about the default judgment. It was not until about 2021 or 2022 that he talked to me about it. I told Florian that didn't sound right to me. I advised him that there is a procedure for setting aside default judgments."

Handzlik convinced Judge Tony Richardson that Pricaspian's attorney R. Jeffrey Neer erred in 2009 when he filed a declaration requesting an order to serve Homm notice by publication. In ruling on the motion, Richardson found that the attorney "failed to address the underlying facts of the claim" in the declaration. The judge also held that he should have had his client make the declaration, because the attorney had no personal knowledge of the underlying facts. The judge granted Homm's motion to set aside the default judgment on June 3, 2024, some 16 years after he was sued.

Once that decision was made, Handzlik moved to dismiss the entire case. On Jan. 6, Richardson reluctantly granted the motion and dismissed the underlying civil case.

The unusual turn of events hinged on an unforgiving California statute that mandates service within three years after the action is commenced.

"As discussed at the oral argument, the mandatory nature of section 583.210 is harsh. The court also notes established case law validates the sometimes draconian result of dismissal, even when it smacks of palpable unfairness given the particular circumstances in a case," Richardson wrote in his order granting dismissal.

"Notwithstanding plaintiff's protestations concerning defendant taking furtive action to avoid service and essentially taking advantage of the judicial system may be on the mark, section 583.210 is unforgiving, and case law establishes defendant's absence from the state to avoid service of the summons and complaint does not permit the tolling of the three-year period in which defendant must be served with the summons and complaint under section 583.240," Richardson ruled.

Neer, now with Forum Law Partners in Rolling Hills Estates, was emailed Tuesday, seeking his comments on the developments.

The plaintiffs' current attorney, F. Phillip Hosp, quoted Homm's book in his filings. The documents say that the FBI could not locate Homm because he was living under an assumed name with false passports. Hosp is a partner with Foley & Lardner LLP.

One section of Homm's memoir reads: "We were heading to Valencia where everybody would lose our trail. Thereafter, moving the cash to Colombia would get a bit sketchier. ...I had procured my new identity, incentivized airport security to be less diligent than usual, and made it safely from Spain to Colombia with my cash intact."

But Handzlik said this week that Homm "never evaded service of process in the civil case. Rather, the lawyers for Pricaspian later claimed he did. In fact, as our pleadings state, the record reflects that Pricaspian and its lawyers knew right where Homm was when they filed the California civil suit in August 2008."

Handzlik added that Homm was "a highly successful hedge fund manager for years, [who] had long been seen as a brilliant, colorful and robust investor." He said Homm filed a sworn declaration in an identical lawsuit filed by Pricaspian earlier in 2008 in Colorado stating where he resided in Europe.

"Instead of acting on that information and serving Mr. Homm under the Hague Convention, Pricaspian voluntarily dismissed the Colorado lawsuit in about June 2008. Just about two months later, in August 2008, Pricaspian filed this new lawsuit in LASC and never told the Judge presiding, Michael Solner, anything about its Colorado case," Handzlik wrote in an email. "Pricaspian also didn't tell Judge Solner that, in 2008, Mr. Homm was represented by Colorado counsel and had provided a sworn declaration stating where he lived in Europe."

Hosp said he was not authorized by his clients to comment on the particulars of the case. But he addressed California Code of Civil Procedure Section 583.210.

"The Legislature needs to change the statute. It was designed to prevent plaintiffs from letting lawsuits linger, and to ensure defendants were served in a timely manner and that the case is moved along quickly," Hosp said. "There should be some carveout for plaintiffs who diligently prosecute lawsuits and are hindered by a defendant who deliberately evades service."

Handzlik said he believes that Pricaspian has managed to collect less than $100,000 from Homm's book royalties. Handzlik said he will seek to recoup the money for his client, whom he is also representing in the criminal matter in the United States.

The DOJ says Homm is still a fugitive in the criminal case, for which he has never faced trial. Germany does not extradite its citizens.