Banker Julius Meinl arrested in Vienna over fraud

The arrest follows 18 months of investigations by prosecutors and financial watchdog FMA, and mainly relates to Meinl's role in the fall of Meinl European Land, a listed real estate firm started by Meinl Bank, Vienna prosecutors said.

Among other crimes, British-born Meinl is accused of having orchestrated a buyback in which Meinl Land bought 1.8 billion euros ($2.4 billion) worth of its own shares to prop up the share price before it suddenly fell off a cliff in July 2007.

"The most serious is defrauding investors by buying back shares to prop up the share price," said Michaela Schnell, spokeswoman for Vienna state prosecutors. "He was arrested because there is risk of escape."

Other allegations include that Meinl Bank damaged Meinl Land shareholders by overcharging for services, and that it wrongly portrayed Meinl Land shares as an almost risk-free investment in several widely advertised share issues during 2005 to 2007.

Meinl, a personal friend and business partner of former Austrian Finance Minister Karl-Heinz Grasser, would face up to 10 years in jail if found guilty. His lawyer was not available for a comment.

Meinl Bank declined to comment on the suspicions against its chairman but only issued a statement reassuring clients that the bank and clients' deposits were safe.

MEINL'S RISE AND FALL

Julius Meinl's arrest marks the nadir for a once proud family that started selling coffee beans in Vienna in 1862, built a retail chain, fled from the Nazis to Britain in 1938 and then rebuilt the chain in Austria after the war.

Trained at Bear Stearns in the 1980, Julius took over the family's bank and turned it into the center of the family's fortune, selling off the retail business but for a posh deli in Vienna's center.