, Jun 24, 2008 / 11:59 pm (CNA).- An Italian businessman who claimed to have close connections with the Vatican in his appeals to real estate investors was arrested on Tuesday on charges of operating a fraudulent real estate scheme.

The 29-year-old Raffaello Follieri was charged with conspiracy, wire fraud, and money laundering in a U.S. District Court in Manhattan, Reuters reports.

According to federal prosecutors and the FBI, Follieri is accused of misleading investors into believing he has close links with the Vatican that would enable him to buy the Catholic Church’s unwanted U.S. real estate at a discount.

Follieri and others allegedly used the investors’ money to buy expensive clothes and restaurant meals, a $37,000 per month Manhattan apartment, and other personal expenditures including medical expenses for his girlfriend at the time, whom authorities did not identify.

For four years Follieri has dated actress Anne Hathaway, who starred in the films “Get Smart” and “The Princess Diaries.” The two have reportedly ended their relationship.

Follieri, a native of Foggia, Italy, allegedly claimed that the Vatican formally appointed him to manage its financial affairs and that he met with the Pope when he visited Rome.

According to the criminal complaint unsealed in court on Tuesday, witnesses say Follieri kept various ceremonial robes in his office in New York. In one incident, Follieri allegedly asked a monsignor travelling with him to change into the robes of a more senior clergyman “in order to create the false impression that Follieri had close ties to the Vatican," the complaint says.

Follieri allegedly received millions in investment money from an unspecified private equity firm based on his misrepresentations. The complaint claims that his scheme lasted from June 2005 to June 2007, according to Reuters.

He is charged with one count of conspiracy to commit wire fraud, which carries a penalty of up to five years; six counts of wire fraud, which carry a penalty of up to 20 years; and five counts of money laundering, which also carry a penalty of up to 20 years. If convicted, Follieri also faces fines.

Follieri has also been sued in Delaware by California supermarket mogul Ron Burkle, who accused him of misusing money from a joint real estate venture involving buying and selling Catholic Church properties.

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