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

Posted by jefhenningeresq in News.
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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.

Former Bordentown, NJ car dealership owner arrested on bank fraud charges August 10, 2009

Posted by jefhenningeresq in News.
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I actually had a case like this, just on a smaller scale; but still involving a ton of money.  My client ran a small dealership and became in debt to a several customers.  My client called me at the first sign of trouble and as a result, law enforcement never called.  We just worked everything out. In this case, it sounds like everything just went out of control.

 This is one of those cases where you have to look into her personal finances and determine if he is just a bad businessman who got in over his head or a greedy scammer who thought he could just get away with it. With a nice house on the water, he certainly wasn’t living a frugal lifestyle on the surface. 

TRENTON – The former operator of a Bordentown car dealership was arrested today on a federal Indictment in connection with his check-kiting scheme that resulted in losses of more than $7 million to banks, Acting U.S. Attorney Ralph J. Marra, Jr., announced.

Denis Kelliher, 39, who resides in both Toms River and Monroe Township, was arrested at his home in Toms River by Special Agents with the FBI and IRS Criminal Investigation early this morning. Kelliher is scheduled to make his first appearance in federal court and be arraigned on the 11-count Indictment today at 1:00 p.m., before U.S. District Court Chief Judge Garrett E. Brown, Jr., in the federal courthouse in Trenton.

On August 6, 2009, a federal grand jury returned the Indictment which charges Kelliher with two counts of bank fraud, one count of wire fraud, and eight counts of money laundering. ccording to the Indictment, Kelliher was the principal operator of Cartec Motors, LLC, (“Cartec”) located on Route 206 in Bordentown, which was in the business of buying and selling both new and used motor vehicles, including recreational vehicles.

The Indictment describes a scheme in which Kelliher attempted to create artificial balances in checking accounts that he controlled, including Cartec accounts at KeyBank, Commerce Bank (now known as TD Bank), 1 his personal account at 1st Constitution, by transferring monies between these accounts.

Kelliher allegedly wrote checks on accounts that he controlled, and deposited these checks into other accounts that he controlled, while knowing there were insufficient funds in the accounts against which the checks were drawn – a scheme commonly known as “check kiting.” The Indictment charges that as a result of the defendant’s check kiting activity, Cartec’s account at KeyBank was overdrawn by more than $6.9 million, and that its account at Commerce was overdrawn by more than $200,000.

In addition, the wire fraud count charges Kelliher in connection with a separate scheme in which he approached a prior Cartec customer for a $410,000 loan purportedly to be used to purchase recreational vehicles for re-sale. The Indictment alleges that Kelliher provided the former customer, identified only as “Victim-1” in the Indictment, with a personal financial statement which claimed that as of Dec. 31, 2008, Kelliher’s net worth exceeded $6.2 million. The Indictment alleges this financial statement was false and that it failed to disclose that, in September 2008, KeyBank obtained a judgment for approximately $27 million against Cartec and Kelliher individually.

Counts One and Two of the Indictment, charging Kelliher with bank fraud, each carry a maximum penalty of 30 years in prison and a fine of $1 million. Count Three, which

 

st Constitution Bank and Roma Bank, and charges wire fraud, carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendant. Counts Four through Eleven, charging money laundering, each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendants.