Hathaway's Ex Cops a Plea, Faces Prison Time

Anne Hathaway's ex-boyfriend pleaded guilty this morning to an elaborate con that netted him millions from unsuspecting investors -- and ultimately cost him his actress girlfriend.

Raffaello Follieri, 30, appeared in Manhattan federal court today where he entered a guilty plea as part of a plea deal with federal prosecutors to reduce his sentence and avoid trial.

The Italian entrepreneur, who was infamously dumped by Hathaway before his arrest, has been in plea discussions with federal prosecutors for weeks.

He could have spent up to nine years behind bars if a jury had convicted him of wire fraud, money laundering and conspiracy. Instead, he will get a considerably shorter prison term when he is sentenced on Oct. 3. Follieri agreed not to appeal any sentence of up to five years and three months in prison.

He also agreed to repay $2.4 million and forfeit 12 watches, according to a court document. The document also said he was required to surrender jewelry, watches and other items that were recovered from an "individual" -- most likely Hathaway. They included gold and silver Rolexes, silver bracelets and earrings with stones, a five-strand gold and pearl necklace and a Louis Vuitton box.

Follieri has been in federal custody, held on $21 million bail, since his June 24 arrest for swindling investors out of millions.

Claiming close ties to the Vatican, Follieri convinced investors that he could give them first dibs on surplus Catholic Church properties. He then stole up to $2 million from his investment firm, according to the U.S. Attorney's Office, and blew it on a lavish lifestyle that included a $37,000-a-month apartment, vacations, clothes and gifts for Hathaway.

Follieri used his good looks and charm to work his way into a network of the rich and powerful, including former President Bil Clinton, Republican presidential candidate Sen. John McCain, designer Oscar de la Renta and the Pope. Using such high-powered connections, he was able to sign lucrative real estate deals, particularly with Clinton's billionaire pal Ron Burkle.

The scheme came crashing down after Burkle and others cried fraud.

The "Get Smart" actress ditched Follieri six hours before his arrest, according to Vanity Fair, which added that Hathaway was cooperating with federal investigators.

"You were the love of my life," Hathaway told Follieri, according to the magazine. "I'll always love you. You know that, baby."

Hathaway's rep Stephen Huvane refused to comment for this story.

The actress recently told W magazine for its October issue: "As soon as I found out about the arrest, I had to get on a plane to Mexico to do a press tour for 'Get Smart.' And then I spent a week in shock at a friend's house."

She continued, "It's a situation where the rug was pulled out from under me all of a sudden. But just as suddenly, my friends threw another rug back under me."

Once, at director Jonathan Demme's home, she told the magazine, "I just started to cry because I thought, I don't have a life right now. And I haven't for some time, and I just haven't noticed."

Since the split, Hathaway has been able to focus on her career.

The 26-year-old actress has received rave reviews for her performance as an ex-drug addict imploding on her road to recovery in the Demme comic drama "Rachel Getting Married," which was recently screened at the Toronto Film Festival and is scheduled to be released Oct. 3.

She also stars in Rodrigo Garcia's thriller "Passengers," which also opens in October, and alongside Kate Hudson in "Bride Wars," scheduled for a January release.

"I think she has handled this pitch perfect," said Howard Bragman, a longtime Hollywood PR exec and crisis manager and author of the upcoming book "Where's My Fifteen Minutes."

"I just think that she distanced herself from the boyfriend before this broke. That's No. 1," Bragman told ABCNews.com. "She has not commented on this and has aggressively refused to do so. And she's done what she does best, which is act. They did go out. There are plenty of photos to prove that. But this is not what defines her."

Hathaway met Follieri through a friend in 2004. "It was totally love at first sight," she said in an interview. "He was soooo good-looking. ... He looks like a god."

Follieri, who moved to New York from Italy in 2003, when he was 25, impressed Hathaway with connections to the Pope and the Vatican; trips for the couple to the Bahamas, the Dominican Republic and St. Tropez; and his foundation to help poor children in developing countries.

But there were signs of trouble. In 2007, Burkle sued Follieri for misappropriating more than $1.3 million from their real estate venture to finance personal expenses, such as private jets and a Manhattan penthouse. Follieri later settled the case out of court.

In April he turned himself in to New York City police and was charged with a misdemeanor after he bounced a check for $215,000. Follieri later came up with the funds to make good on the check.

Hathaway stepped in to help, paying the $37,000-a-month rent for the lush duplex apartment the couple shared, according to Vanity Fair.

But her father was apparently concerned enough about her relationship that, according to Vanity Fair, he asked a private investigator friend to look into Follieri back in 2005.

Just prior to his arrest, the New York State attorney general began investigating his charity, The Follieri Foundation, and the couple was reportedly fighting. According to Vanity Fair, Hathaway, on her promotional tour for "Get Smart," tried to pull the plug on the relationship in Paris but met with Follieri one more time in New York before their final phone call the day he was arrested.

Bragman, the PR specialist, said that it's fortunate for Hathaway that Follieri took a plea, because his name will be out of the headlines for a while.

"All the buzz about her performance in the Demme film is going to overshadow any relationship with this guy," Bragman said. "Are any of us to be held responsible for all the people we dated? No. I think people are empathetic."