Markus Frick: Germany's Jim Cramer, with a criminal twist

FORTUNE -- In qualifications-obsessed Germany, the baby-faced stockpicker Markus Frick stood out. When his first book in 2001 claimed the former baker had turned 100,000 euro into a million in the space of a year -- and that he could tell investors how to do the same, if they signed up for his seminars and e-mail newsletters -- Germans listened.

With titles like I'll Make You Rich and Money is Lying In the Streets: The 30-Day Program for More Success and Profit, Frick's books, along with his TV appearances and websites, quickly made him the country's flashiest investment guru, a sort of German Jim Cramer. By 2006, he had a small empire of investment seminars, market strategy newsletters and was a regular commentator on German cable network N24.

But his rapid rise came to an abrupt halt. Indicted on charges of market manipulation in 2007, Frick, 38, spent the last three years under a cloud, fighting civil lawsuits from angry clients and preparing to defend himself against criminal charges in a trial expected to begin this summer in Berlin.

Frick's biography is a rags-to-riches classic. The son of two bakers from Sinsheim, a small town in southwestern Germany, Frick collected cardboard boxes for spare change and helped clean baking pans for his parents to earn money. At 14, he began buying stocks. Trained as a baker, he qualified as the youngest "master baker" in Germany at age 22 and joined the family business, starting his days there at 3 a.m. and taking on a second job after hours. At 25, he sunk his savings into the market, making a killing in the booming "new economy" of the late 1990s.

From baker to market maker

With the publication of his book, I'll Make You Rich, in 2001, Frick became a household name, appearing on everything from celebrity charity telethons to TV variety shows. He was the best known of a wave of investment gurus who have brought a measure of hype and glamour to the stodgy, institutional face of German investing.

"From my point of view, the investing culture in Germany is still very different from, for example, that in the U.S., with private investors playing a much smaller role compared to institutions," Frick said in an e-mail interview with Fortune. "But if you compare things today with what it was like here 20 years ago, a lot has happened."

In 2005, Frick started a call-in investment program Saturdays at 11:30 p.m. called Make Money -- the Markus Frick Show, which was modeled heavily on CNBC's Mad Money. Frick's unconventional background and everyman-style connected with viewers and made the show a hit.

"Frick tried to use his charisma and personality to bring people in," says Sebastian Hofauer, a lawyer and analyst with Kanzlei Goeddecke, a Siegburg, Germany law firm specializing in financial and credit law. "If you watch his videos, he's very much a fast talker who tries to come off as everyone's buddy."

While the man-on-the-street tone of Frick's seminars -- which at their peak pulled in 25,000 people a year -- and newsletters may be familiar from countless cable shows in the U.S., he was the first to bring the genre to German TV. "We've been so successful because there's really nothing else like this in Germany and the German-speaking region," Frick says. "We're not looking at people as customers, but as investors, and trying to give them the tools to be even more successful themselves."

Follow the money

The party came to an end in October 2007, when Frick was accused by German prosecutors of a classic "pump-and-dump" scheme. According to Berlin criminal court spokesman Martin Steltner, between September 2005 and June 2007, Frick used his investment newsletters and e-mails to recommend stocks without disclosing his personal stakes in the transactions. On 23 occasions, Frick allegedly promoted three shady Russian companies -- RussOil, Star Energy and StarGold -- in his newsletters while working with unnamed partners behind the scenes to sell the stocks.

The value of all three stocks soared, even though there was no substance to the companies at all. German financial regulators say more than 20,000 investors spent over 760 million euro (more than $900 million) on companies that only existed on paper. All three then crashed overnight, wiping out the savings of thousands of small investors who subscribed to Frick's newsletter. N24 cancelled Frick's TV show in the wake of the scandal.

Frick and his lawyer claim he was taken in by a pair of shady figures who created the shell companies, listed them on the Frankfurt stock market, and then convinced Frick they were legitimate.

Prosecutors didn't buy the story. A Berlin criminal court alleged Frick was in on the scheme all along, acting as the front man for his co-conspirators. A court spokeswoman says a trial could begin in the next few months.

In the meantime, Frick is still actively promoting his market expertise, and he claims that investors are still following him. He says he'll host more than two dozen investment seminars this year in Germany, Austria and Switzerland, and that he has 32 full- and part-time employees working on projects ranging from investment newsletters and websites to an Internet-TV broadcast, "MoneyMoney." Frick says his website now draws 350,000 visitors per month.

Court proceedings could drag on for years, and there's nothing to stop Frick from working in the meantime -- even if investors might question his advice. Frick declined to discuss the case with Fortune, saying that he had nothing to add to what had already been said in the media and court documents.

Hofauer says the case is a cautionary tale for the fledgling German investing community. "Frick's case has a lot to do with his personality, not so much with the investment newsletter industry overall," he says. "It's the same all over the world -- when people are promised outrageous profits, they sometimes do stupid things."