Anne Hathaway's ex admits to fraud

NEW YORK (Reuters) - An Italian businessman who dated Hollywood star Anne Hathaway and did a deal with supermarket mogul Ron Burkle, pleaded guilty on Wednesday to charges of fraud in which he lied about links to the Vatican.

Millionaire Raffaello Follieri, 30, admitted in U.S. District Court to a scheme in which he fraudulently obtained more than $2 million in a web of shell companies with phony consultancies.

Dressed in dark blue prison-issue pants and shirt over a white undershirt, Follieri answered "guilty" to each of 14 counts charging him with conspiracy to commit wire fraud, wire fraud and money laundering.

Follieri was arrested on June 24 and accused of operating the scheme between 2005 and 2007 in which he led investors to believe that he had close connections with the Vatican that enabled him to buy the Catholic Church's unwanted U.S. real estate properties at a discount.

Since his arrival in the United States in 2003, the native of Foggia, Italy, who was described by prosecutors as a con-man, forged a real-estate venture with California supermarket billionaire Burkle.

He dated Hathaway, star of "The Princess Diaries" and "The Devil Wears Prada" for four years until they split just before he was arrested in June.

Follieri's attorney Flora Edwards told reporters outside the courthouse that one explanation for the fraud was that he "got side-tracked ... perhaps to adopt a lifestyle that was not his, that he was not able to maintain."

ADMITS WRONGDOING

In a statement Follieri read in court on Wednesday, he said, "I wired money from a New York bank to the Vatican bank in Rome to promote my relationship with the Vatican.

"I knew what I was doing was wrong."

On each of the most serious charges, Follieri faced a possible maximum term of 20 years imprisonment. But in a plea agreement, Follieri agreed to waive the right to appeal any prison term that was five years and three months or less.

When he is sentenced on October 3, he also faces possible fines of up to $500,000 and the plea deal requires him to forfeit $2.44 million in proceeds from a scheme prosecutors said supported a lavish lifestyle.

They said he used the money to pay for exotic vacations and privately chartered flights for his girlfriend at the time, but she was not identified.

The plea agreement also requires the forfeiture of "items recovered in or about August 2008 from an individual who received them from the defendant" without identifying the person. They include gold and silver watches, rings, bracelets and earrings with colored or clear stones.

Prosecutors said Follieri used money from his scheme to buy expensive clothes, restaurant meals and a $37,000-a-month Manhattan apartment.

He told the court that he wired money "for purposes that defrauded investors" and that he wired money from the joint venture in New York "to my personal account to pay for personal services."

(Additional reporting by Edith Honan, editing by Maureen Bavdek)