FlowTex

The FlowTex Technologie GmbH & Co. KG in Ettlingen is the most severe case of economic crime in the history of the Federal Republic of Germany.

In this context, 55 house searches were carried out, initiated 123 investigations against 110 accused, imposed on the four main perpetrators of several dishes prison sentences totaling 58 years, and two FDP ministers lost their office. The calculated by prosecutors for criminal damage amounted to DM 4.9 billion ( 2.6 billion euros ). This amount included approximately DM 0.7 billion (approx. 0.4 billion euros ), the three days after the arrest of the main perpetrator Manfred Schmider in connection with the led by Commerzbank and Dresdner Bank in the ways of a bond issue of FlowTex Group would have flowed to the FlowTex - company account.

The Company

The business purpose of the company FlowTex comprised in the period between 1994 and 1999, the underground grave loose - so unlike classical laying work without opening the earth's surface running - installing the wiring and trade in the horizontal boring machines required for this purpose. The cables (power, gas, water, telecommunications, etc. ) could be moved by controlled horizontal drilling, in stages over long distances. The method was fast, saved costs and affected the environment little (avoided road closures, etc.).

The fraud

FlowTex sold 3142 of these drills, which really do not exist. This contrasted with 270 real drills, so well over 90 % existed only on paper, at a price of around 1.5 million DM

The actors

Founder of FlowTex was Manfred Schmider along with Klaus Kleiser. Chief Financial Officer of the company was Karl Schmitz, Vice President was Thomas Reinhard. The manager of the supposed manufacturing company KSK was Angelika Neumann ( a former secretary Manfred Schmiders ), issued the invoices over 1200 non-existent drills. Manfred Schmiders brother Matthias Schmider was also involved as manager of the supplier company times and head of the French FlowTex Branch on FlowTex fraud. According to calculations by the liquidator of FlowTex Matthias Schmider to have " earned " in this way more than 85 million DM.

The procedure

FlowTex sold the bogus drilling systems to leasing companies and banks, and leased the equipment back ( sale- leaseback transaction ) so that the leasing companies were able to demonstrate the necessary market demand for loan financing from the banks. The gain of the fraud were the loans to leasing companies for the purchase of nonexistent drills. In order to conceal the fact that only one tenth of the drilling systems really existed, forged the shareholders of FlowTex before year-end audits, among other things, the serial numbers on the license plates of drilling equipment by new registration tags were still attached with new serial numbers on the same equipment.

This type of credit fraud is similar in its "business model" a Ponzi scheme, because the lease payments to the leasing company requires ever new "sales" non-existent machines to them.

The role of financial authorities

The involvement by auditors of the competent tax office considered a committee of the Baden-Württemberg Landtag and was also the subject of several lawsuits now closed. The defendants were accused derived from their audits aware of the fraud and yet have remained silent. An auditor had received benefits in kind of FlowTex. He was charged with receiving bribes - but not for complicity in the fraud - criminally convicted.

A complaint against the State of Baden -Württemberg official liability action for damages in the amount of 1.1 billion euros had the district court of Karlsruhe in the first instance, as a grant of tax officials to FlowTex fraud or an official abusive behavior was not detectable. The appeal against this judgment dismissed the Higher Regional Court of Karlsruhe. After the federal court dismissed the leave to appeal on 27 May 2009, the Klagabweisung is final.

The process

In 2000, the Managing Director Manfred Schmider and other employees has been demonstrated fraud, which had caused a loss of about 2.9 billion marks. Those responsible were sentenced in 2002 to six to twelve years' imprisonment; the sentence to twelve years in prison for Manfred Schmider was reduced to its revision back at 11 years and 6 months. On October 2, 2007 Manfred Schmider was released on parole after serving two thirds of his sentence.

Considerably in civil terms, the decision of the Federal Court on the application of the temporary administrator of FlowTex for payment of account balances of the company. The Federal Court makes clear in that judgment that if arbitrary changes of a transfer instruction by the bank as security for loans the subsequent transfer to the client can no longer be counted as own performance.

The political environment

In addition to the charge at FlowTex also auditors, regulators, prosecutors and FDP and CDU politician of the State of Baden- Württemberg came into the twilight, as the air shops for many years undetected. Manfred Schmider maintained friendly contacts with more authority and, was highly regarded as a successful entrepreneur before the uncovering of the scandal. Thus, the Baden-Württemberg FDP honorary chairman Jürgen Morlok was in 1994 as a corporate spokesperson right hand Schmiders. The former Baden-Württemberg's Minister of Economy Walter Döring was sentenced to probation for unsworn false statement in Flowtex process.

Whereabouts of the individual assets

Between 1994 and 1999 FlowTex took leasing companies around DM 4.2 billion one. DM 2.6 billion of which were repaid in the form of lease payments. The obtained fraudulently profit thus amounted to about 1.6 billion DM

Incurred during this period real business expenses (salaries, rents, etc. ) amounted to about 686 million DM and taxes of around 325 million DM The remaining difference of approximately DM 616 million were paid to the former CEO of FlowTex, Manfred Schmider, Klaus Kleiser, Angelika Neumann ( Executive Director of KSK Guided Microtunneling Technologies ), Matthias Schmider and to various investment companies in connection with investments in leasing companies in the amount of 80 million DM

The FlowTex transactions were taxed properly, so the city had to pay business taxes Ettlingen a considerable amount to the liquidator after the disclosure of the scandal.

Musical

The FlowTex - story inspired the musical Big Money, which premiered in 2011 at the Baden State Theatre Karlsruhe. Thomas Zaufke setting of a text by Peter Lund.