An Italian businessman who dated actress Anne Hathaway was arrested yesterday on charges that he posed as the Vatican�s US representative to fleece investors in a property development firm.

LARRY NEUMEISTER, NEW YORK

An Italian businessman who dated actress Anne Hathaway was arrested yesterday on charges that he posed as the Vatican's US representative to fleece investors in a property development firm.

Raffaello Follieri, 29, allegedly improperly spent hundreds of thousands of dollars obtained from investors on a lavish lifestyle, including private flights with his girlfriend and others, expensive meals and clothing, and a posh Manhattan flat.

The girlfriend was not identified but it has been reported that Hathaway, star of such films as The Devil Wears Prada and The Princess Diaries, had until recently dated Follieri.

He is accused of duping a partner into investing millions in a scheme to buy properties at bargain prices from the Roman Catholic Church in the United States and redevelop them. Follieri, who was due in court yesterday, is charged with wire fraud conspiracy, wire fraud and money laundering.

Prosecutors allege Follieri embellished his slim connections to the Vatican to make it seem he was so powerful that the Catholic church would sell him property at a deep discount.

Once, it is alleged, he asked a monsignor to change into the robe of a more senior clergyman to create the impression that Follieri had close ties to the Vatican.

Follieri's alleged scheme unravelled when the principal investor sought an audit of the partnership.

Earlier this month, the New York attorney general's office said it was investigating a foundation run by Follieri that vaccinates children in Third World countries.-AP