An Italian real estate speculator, claiming connections to the highest levels of the Vatican and attempting to purchase empty and abandoned Catholic Church properties in the United States, was charged June 24 in Federal District Court in Manhattan with fraud and money laundering.
Raffaello Follieri, 29, the chairman and chief executive of the Follieri Group, was charged in the 18-page complaint with persuading investors he had a special relationship with the Vatican and was consequently able to purchase church properties at below-market rates. For two years beginning in June 2005, the complaint alleges, Follieri “operated a fraudulent real estate investment scheme” by which he gained access to investors’ money by falsely representing his connections with the Vatican.
Follieri’s attempts to bid on properties owned by dozens of U.S. dioceses and religious orders were first reported by NCR on March 3, 2006.
In a cover story, former Washington writer Joe Feuerherd, documented that the Follieri group was attempting to exploit a relationship with a highly placed Vatican official to gain access to church officials in the United States.
“The firm’s literature mentions no specific Vatican figures, but the Follieri group clearly has ties to Cardinal Angelo Sodano, Vatican secretary of state since 1991. Andrea Sodano, the cardinal’s nephew, is a Follieri Group vice president, a fact widely known in U.S. church real estate circles,” Feuerherd wrote. The entire story can be found at http://natcath.org/NCR_Online/archives2/2006a/030306/030306a.php .
Sodano was replaced in 2006.
One curious entry in the federal complaint (see it here http://www.thesmokinggun.com/archive/years/2008/0624082follieri1.html ) mentions National Catholic Reporter in connection with a “pitch book to start up a new media company called Follieri Media.” The pitch book, said the complaint, was distributed to several potential investors. The presentation claimed that Follieri Media had a “unique relationship with the Catholic Church,” and said it planned to acquire such assets as National Catholic Reporter, Legionairres Radio and EWTN. NCR publisher Sr. Rita Larivee, said, “We never heard anything from the Follieri Group.”
Follieri used the money to support a lavish lifestyle, including a luxury apartment in New York and to fund a non-existent office in Rome, according to federal investigators. The complaint also said the money was used for expensive restaurants, expensive clothes, dog walking services, medical expenses for himself and his girlfriend at the time, actress Anne Hathaway, and “flights on privately chartered airplanes to various locations around the world.”
The couple, said to have split up last week, were frequently in the pages of the New York tabloids. Hathaway stars in the recently released movie, Get Smart.
In his earlier story, Feuerherd also noted that the Follieri Group had partnered in 2005 with the Yucaipa Companies, a Los Angeles private equity fund headed by billionaire Ron Burkle, a close friend of former president Bill Clinton. Yucaipa, though not named specifically in the federal complaint, is believed to be “the certain private equity firm” cited as one of Follieri’s investors. Yucaipa sued the Follieri Group last year, claiming that Follieri had used for personal benefit more than $1 million of the $55 million Yucaipa had invested in the firm at that time.
According to a report in The New York Times, bail was set by Judgte Henry B. Pitman at $21 million, secured by cash, property and “five financially responsible persons.” Follieri was also required to surrender all travel documents and was confined to his home in New York.