US
NRI, FORMER CFO OF ALLIED DEALS, INC. SENTENCED AFTER COOPERATING
IN INVESTIGATION AND PROSECUTION OF $683 MILLION PONZI SCHEME
New York, June 17, 2008
Sunil Gupta
MICHAEL J. GARCIA, the United States Attorney for the Southern
District of New York, announced that ANIL ANAND, the former Chief
Financial Officer of Allied Deals, Inc., was sentenced today to
time served (which amounted to 7 months in prison), on charges
stemming from his participation in a sprawling, international
Ponzi scheme, which resulted in over $680 million in losses to
approximately 20 banks worldwide (including J.P. Morgan Chase
& Co., Fleet National Bank, PNC Bank, N.A., KBC Bank, N.V.,
Hypo Vereins Bank, N.A., Dresdner Bank Lateinamerika AG, China
Trust Bank, and General Bank). NAND had pleaded guilty in December
2002, pursuant to an agreement to cooperate with the Government,
to participating in the Ponzi scheme by, among other things, inducing
banks to issuehundreds of millions of dollars in loans. United
States District Judge RICHARD M. BERMAN, who imposed the sentence
in Manhattan federal court, also ordered ANAND to pay forfeiture
of $600,000,000 and restitution of $683,632,800. According to
documents filed and the evidence at trial in this and related
cases in the Southern District of New York and the United Kingdom:
Allied Deals, Inc., Hampton Lane, Inc., and SAI Commodity in
the United States and RBG Resources in the United Kingdom (collectively,
the "Allied Deals companies") purported to be in the
business of brokering trades in non-ferrous metals. The Allied
Deals companies were controlled by brothers NARENDRA RASTOGI,
in the United States, and VIRENDRA RASTOGI, in the United Kingdom.
As part of their business, the Allied Deals companies purportedly
would arrange for sales between buyers and sellers of metal in
legitimate, "arms-length" transactions (transactions
negotiated by unrelated parties, each acting in his/her own best
interest). To finance those metal sales, the defendants then arranged
for loans with banks, usually to be repaid after 180 days. As
collateral for the loans, the banks relied on Allied Deals' accounts
receivables (the money that Allied Deals was due from the customers
for the metal transactions), expecting that the loans would get
repaid when the customers repaid Allied Deals for the metal that
had been purchased.
In fact, hundreds, if not thousands, of metal transactions upon
which the loans were based simply did not exist. ANAND, the RASTOGI
brothers, and their co-conspirators had set up and controlled
an elaborate network of hundreds of sham, nominee companies around
the world (which they called "group companies") to serve
as fake purchasers of metal from Allied Deals so that the defendants
could get loans from the victim banks.
The RASTOGIs and their co-conspirators used loan proceeds from
one victim bank to make the loan payments required by another
victim bank, while concealing that the newly-issued loans were
not being used to fund actual, arms-length metal transactions
and that the money used to pay off the loans had not been provided
by the buyers of metal in bank-financed sales.
The co-conspirators went to extraordinary lengths to mislead
and convince banks into believing that the sham, "controlled"
customers were in fact real, independent companies with actual
employees and offices and with no ownership or control relationships
with the defendants. Among other things, a number of co-conspirators
posed as Allied Deals customers, established offices and phone
lines for the sham companies in the United States and abroad,
arranged for fake letterhead and bank accounts, and were prepared
to field calls from bankers or auditors.
Among other things, ANAND was involved in helping the RASTOGIS
establish a number of the sham "controlled" customers
that were central to the scheme, by recruiting a number of his
friends to set up fake metal companies in New Jersey, New York
and California. ANAND and his co-conspirators at Allied Deals
then used these fake customers to generate millions of dollars
in sham accounts receivables, which they used as collateral to
obtain millions of dollars in loans from the victim banks.
To further the appearance that Allied Deals' customers were real,
independent, metal companies, ANAND helped to establish fake credit
histories for the sham customers. He also supplied sham customers
with false financial data that was then provided to credit agencies
to further the facade that the customers were real, bona fide
metal companies engaged in real, bona fide metal trades.
As part of the fraud, the co-conspirators established a fake
credit reporting agency, which generated false credit reports
attesting to the credit-worthiness of the sham companies. These
credit reports were kept in a series of "credit files"
that Allied Deals maintained for each of its sham customers, which
files could be shown to banks and/or auditors to further the deception
that they were real customers.
Allied Deals employees forged many of the documents that the
banks required in order to obtain loans. For example, the documentation
department created fake purchase contracts at Allied Deals' office
in New Jersey, cut and paste signatures for the purported customer,
and faxed the documents between fax machines at Allied Deals,
in order to make it appear that the documents had come from overseas.
Allied Deals employees also routinely forged such key shipping
documents as steamship line bills of lading, and Chamber of Commerce
certificates of origin.
ANAND also participated in key meetings with bank officials,
during which he and his co-conspirators made representations regarding
the nature of Allied Deals' metal transactions in order to obtain
millions of dollars in loans.
The RASTOGI brothers and their co-conspirators also shipped the
same metal between multiple customers at different ports around
the world, using each repeated metal transaction to support an
additional loan. To increase the declared value of the metal being
shipped (and thus the amount of each loan), Allied Deals employees
also falsely represented on the bill of lading the type of metal
in a particular container -- stating, for example, that a particular
container contained an expensive metal, such as cobalt, when it
in fact contained a cheaper metal, such as lead. The defendant
and his co-conspirators also used the same collateral for two
different loans by submitting purportedly "original"
bills of lading to more than one bank.
In the Spring of 2002, several of the defendants in the United
States were assigned the task of fielding telephone calls from
auditors or bankers, while posing as a representative of one or
more of the sham companies in the United States. To facilitate
this effort, the co-conspirators obtained a number of cellular
telephones, each of which was assigned to a particular sham company.
A number of Allied Deals employees then fielded calls from bankers,
falsely assuring them that the amounts due would be repaid.
Fifteen defendants have been arrested in the United States in
connection with this case. Nine -- including ANAND -- pleaded
guilty; five were found guilty at trial; and one was acquitted.
Two defendants in the U.S. case remain at large.
ANAND pleaded guilty to one count of conspiracy, one count of
bank fraud, one count of conspiracy to commit money laundering,
one count of tax evasion, and one count of making false statements
to federal agents.
As part of his cooperation, ANAND testified in 2004 in New York
against six of his co-defendants five of whom were convicted after
trial. As a further part of his cooperation, ANAND testified in
London in the fall of 2007 at the UK trial of VIRENDRA RASTOGI
and three others. That trial recently ended in the conviction
of three of the defendants, including VIRENDRA RASTOGI. On June
5, 2008, VIRENDRA RASTOGI was sentenced to a term of 9 1/2 imprisonment.
ANAND, age 46, resides in Plainsboro, New Jersey.
Mr. GARCIA thanked the Federal Bureau of Investigation and the
United Kingdom's Serious Fraud Office for their assistance in
this investigation and prosecution.
This prosecution is being handled by the Major Crimes Unit of
the United States Attorney's Office. Assistant United States Attorney
MARCUS A. ASNER is in charge of the prosecution
United States Attorney- Southern District of New York
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