An American nurse who initially told police that two armed intruders set the fire that killed billionaire Edmond J. Safra confessed today to starting the fire himself, apparently because of a dispute with a supervisor, Monaco's chief prosecutor said.

Authorities in the tiny Mediterranean principality said they would charge Ted Maher, 41, with arson resulting in the deaths of Safra, a Lebanese-born banking mogul who suffered from Parkinson's disease, and a female nurse, Vivian Torrente, in the early morning fire on Friday that gutted Safra's luxury penthouse apartment.

According to Monaco's chief prosecutor Daniel Serdet, Maher admitted under interrogation this morning to concocting the story of an armed assault on Safra's apartment in hopes of ingratiating himself with his employer by emerging as the hero who would save his life. Maher harbored "black thoughts" about his supervisor--the chief nurse on Safra's staff, whom he would identify only by her first name, Sonia--and wanted to protest the working conditions she imposed, Serdet said in a telephone interview. Maher apparently hoped he would emerge from the incident with greater authority in the Safra household.

The prosecutor said Maher "absolutely had no intention of harming Mr. Safra or Mrs. Torrente, let alone killing them," and was full of contrition for the unintended consequences of starting the fire. Serdet described Maher, who had worked for Safra for about five months since leaving a job at a hospital in New York City, as an unstable man who had taken heavy doses of sedatives, the Associated Press reported.

The death of Safra, 67, the founder of Republic National Bank of New York, stunned the international banking world and had touched off rampant media speculation here about motives for the crime centering variously on the impending sale of Republic National to the London-based banking firm HSBC Holdings, and the role of Safra-owned banks in investigations of Russian money laundering.

Safra was buried today in Geneva, where he maintained one of several residences. The funeral at Beth Yacob Synagogue was attended by family and friends, including Nobel Peace Prize winner Elie Wiesel, Israeli Foreign Minister David Levy, Prince Sadruddin Aga Khan and former U.N. secretary general Javier Perez de Cuellar. Safra's Brazilian-born wife, Lily, who survived the fire, wept before the coffin, news services reported.

Since Friday, Maher had been the chief witness to the dawn blaze that gutted Safra's duplex residence on the Monte Carlo waterfront, and was the only person who said he had seen intruders.

Told by Maher of the presence of two hooded, knife-wielding men in the sixth-floor apartment, Safra and Torrente locked themselves in a bathroom, and nearly two hours later they succumbed to smoke inhalation from two fires spreading through the top of the building.

According to police, Maher first said he had been stabbed by the intruders and then had momentarily lost consciousness before alerting the authorities. Maher, bleeding from the stomach and leg, did not mention the fires. Serdet said Maher today "confessed that he stabbed himself twice to try to cover up the affair."

Serdet said Maher's story had seemed "highly improbable" from the outset, particularly the scenario of armed intruders breaching the virtually impregnable building leaving no sign of a forced entry. Video surveillance of the building, which housed three banking offices on the floors below the Safra duplex, showed no entry or exit by anyone, Serdet said.

Little is known about Maher, who was recruited from a New York City hospital about five months ago, Serdet said. He joined Safra's Monaco nursing staff six weeks ago. Before moving to Monaco, Maher lived in Stormville, N.Y., a town about 70 miles north of New York, with his wife, Heidi, and their three children.

A neighbor described Maher and his wife as hard workers who spent much of their time commuting to the New York hospital where they both worked long shifts. The neighbor, who has known Heidi Maher's family for more than 25 years, said the news about Maher was "unbelievable," and "surely a mistake."

"I don't believe what they accused him of," said the man, who asked that his name not be used. "Why would he set that fire? He was a nice man. I don't know what is behind this, but I think maybe the truth will come out. It is not believable that it was him."

Maher faces life imprisonment if convicted of arson.

Since the onset of Parkinson's disease, Safra had maintained a medical team wherever he went.

Safra also had a local staff in Monte Carlo of 10 bodyguards, but none was present in the apartment the morning of the fire. Serdet said that despite intense concern about his personal security, Safra preferred not to have bodyguards overnight in the 10,000-square foot apartment. Another source in Monte Carlo said Safra's wife objected strenuously to the heavy security that accompanied them on their travels.

Lily Safra and a young granddaughter were in another part of the apartment at the time of the fire and were rescued by firefighters unharmed. But Lily Safra, who was in cellular phone communication with her husband during the ordeal, was not able to persuade him to emerge from the bathroom. According to Serdet, Safra was convinced that the noise of firefighters tromping through the apartment came from the assailants Maher had described.

Staff writer Liz Leyden in New York contributed to this report.

CAPTION: In Geneva, Edmond J. Safra's widow enters a car after his funeral.

CAPTION: Police search the charred remains of the Monaco penthouse of Edmond J. Safra, whose nurse confessed to setting the fire.