The Vatican fundraiser charged with doing the devil’s work

The Italian conman with the film-star girlfriend boasted he had a direct connection to the Vatican. But his glittering lifestyle is now in ruins as he awaits trial for fraud on bail of $21m.

Raffaello Follieri seemed to have it all: a jet-set lifestyle, an A-list girlfriend, and connections stretching from the Pope to Bill Clinton. That glittering life now lies in ruins.

Follieri, 29, "a foppish Italian businessman with an aristocratic swagger and wallet to match" must have suspected he was in trouble when he was dumped last month by doting girlfriend Anne Hathaway, says The Independent. Confirmation came last week when the Feds burst into his Fifth Avenue apartment at dawn and marched him off in handcuffs to face multiple charges of fraud, conspiracy and money-laundering.

"It all started with sex," says The Sunday Times, "although not the kind usually portrayed in Hollywood blockbusters." The Catholic Church, hit by a flood of lawsuits claiming sexual abuse by US priests, had to raise cash to settle $1bn-plus in claims; the answer was to sell some of its real estate. In 2003, Follieri was sent to the US by his father, Pasquale a former mechanic with a history of failed ventures in the auto and cosmetics sectors to tap the proceeds. The plan was to persuade investors the two had an inside track to the Vatican, which would give them first refusal on the best properties at steeply discounted prices.

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The Follieri Group certainly looked the part: its New York offices were staffed by Filipina nuns, while Follieri described himself as the Vatican's "chief financial officer". He kept ceremonial robes in his office and often attended meetings with two monsignors in tow. The plan was to do "God's work". "We don't look for the best dollar," he told The Wall Street Journal in 2006. "We are here to make the best difference in the community."

Follieri went down a storm. He landed Miss Hathaway, then several multi-million-dollar deals with well-heeled investors. He is alleged to have paid a former White House aide $400,000 for an introduction to Ron Burkle, LA supermarket billionaire and a close friend and former business partner of Bill Clinton. That produced a $100m deal with Burkle's investment vehicle, Yucaipa Companies.

Follieri promised $50m to Clinton's charitable foundation (it never arrived) and was photographed arm-in-arm with the former president which encouraged even more investors to sign up. If only, says Newsweek, they had known that in Italy, Pasquale Follieri had just been convicted of misappropriating half a billion lire.

In 2005, the Vatican formally denied any links with the Follieri Group, yet the good times rolled on. Follieri persuaded investors that he needed a New York apartment to house visiting Vatican officials and build "good will" with the Church (cost: $37,000 a month). He spent millions on a lifestyle that included partying in the Adriatic with Senator John McCain, flowers, custom-made suits and exorbitant medical fees, including $30,000 to fly a doctor to London for a minor medical treatment.

It all began to unravel in 2006 when Burkle, noting Follieri's failure to secure deals on terms he'd promised, began investigations, says the Canadian Globe & Mail. He sued Follieri last year for misappropriating $1.3m a suit which formed the basis of last week's criminal charges. At the hearing, with bail for Follieri's release trial set at $21m, Follieri collapsed and was rushed to hospital. The trial, scheduled for next year, promises to be a show-stopper.

Raffaello Follieri's charm worked on everyone except the custodians of God's property. Anne Hathaway who made her name in blockbusters such as The Devil Wears Prada and Brokeback Mountain is said to be "heartbroken" by the end of the four-year relationship. But what took her so long? asks Newsweek. Even if she was ready to overlook the Burkle lawsuit, or her would-be father-in-law's conviction, there was the matter of further suits for unpaid bills, a tax investigation, and Follieri's arrest for writing a $200,000 bad cheque (charges were later dropped).

Her apparent naivety was understandable, say prosecutors. Follieri was a consummate "con-man" capable of deceiving "the most sophisticated investor". And when that didn't work, he resorted to threats, says the Globe & Mail. He allegedly told one investor that he "should see what happened to the last guy who crossed Follieri".

This may not be the last scandal we learn of in connection with the US Catholic Church's financial difficulties, notes The Irish Times. As one New York real-estate agent notes, the mass property sell-off is "a property developer's wet dream". It could be argued that Follieri's main problem was that he was just not up to making the most of the opportunity, says The Wall Street Journal.

In 2006, the Follieri Group boasted that it had invested in and developed some $100m-worth of Church property across the US. Yet the record shows that it failed in 17 of 20 attempts to purchase ecclesiastical property between 2003 and 2006 even when it was the highest bidder. Investors might have been taken in by Follieri's blandishments; American dioceses were not so convinced.