White Collar Crime News

Executive charged with bank fraud even though money was paid back to Citi August 25, 2009

This is one interesting bank fraud case.  Assuming the press release is true, it is going to be tough for the Government to argue at trial that Nemazee had the intent to defraud Citi when he paid back all of the money the day after he was interviewed by the feds.  Of course (as they will argue) intent does not mean that it has to actually be carried out.  Its just that quite often, intent can be shown by something that has actually occurred.  For his attorney though, a jury nullification argument would be a great defense here.

Preet Bharara, the U.S. Attorney for the Southern District of New York, and Joseph M. Demarest, Jr., the Assistant Director-in-Charge of the New York Office of the FBI, announced the arrest this morning of Hassan Nemazee, the Chairman and Chief Executive Officer of Nemazee Capital Corporation, in connection with a scheme to defraud Citibank, N.A. (Citibank).

According to the complaint filed in Manhattan federal court, Nemazee engaged in a fraudulent scheme to induce Citibank to lend up to $74 million to Nemazee based on false representations that Nemazee owned millions of dollars in collateral. Nemazee submitted, and caused to be submitted to Citibank numerous documents that purported to establish the existence of accounts in Nemazee’s name at various financial institutions containing many hundreds of millions of dollars. In fact, those were fraudulent and forged documents.

Specifically, the various accounts referenced in the fraudulent documents that Nemazee submitted, and caused to be submitted to Citibank either never existed or had been closed years before he submitted the documents referencing those accounts. Furthermore, on many of the documents at issue, Nemazee falsely provided as the address and telephone numbers of various financial institutions purportedly vouching for his financial strength an address and telephone number that was, in fact, controlled by Nemazee. As a result, in the event anyone at Citibank made an effort to confirm the existence of the assets reflected on the fraudulent documents submitted by Nemazee, they would in fact be contacting a telephone number assigned to Nemazee himself, and not any financial institution.

On Aug. 23, 2009, federal agents interviewed Nemazee at Newark Liberty International Airport as he was in the process of checking in for a flight to Rome. On Aug. 24, 2009, Nemazee repaid to Citibank his outstanding loan, an amount in excess of $74 million.

Nemazee, 59, currently resides in Manhattan and Katonah, N.Y. He is charged with one count of bank fraud, which carries a maximum prison term of 30 years and a maximum fine of $1,000,000 or twice the gain or loss resulting from the crime.