After Dieter Frerichs relocated back to Germany from Spain in the early 1990s, he contacted his friend, qualified psychologist Helmut Kiener, to establish a financial partnership.
However, actual control was via Frerichs office in Mallorca, Spain, marketed to German customers via a telephone line sited in a friend's flat in Munich.
Although further warnings and prosecutions were issued by BaFin with regards the two K1 funds (K1 Global and K1 Invest, a hedge fund), investigations have shown that since 2006 K1 had subscribed a further 300 million euros of investment from both private German investors, as well as banks including Bear Stearns (acquired by JP Morgan), BNP Paribas, Barclays and Hypo Alpe-Adria-Bank International.
Authorities presently suspect that much like the ponzi-schemes run by Bernie Madoff and R. Allen Stanford, that monies were serially transferred between overseas bank accounts to make the whole fund look bigger and more stable than it actually was.
Kiener claimed to have developed what K1 later described as a “semi- automatical allocation system” using statistics to help pick hedge-fund investments.
Police recovered him from the sea, and although taken by emergency ambulance to the Hospital Son Dureta in Palma, he died after a few hours.