About That $75 Million …

     MANHATTAN (CN) – HSBC Bank claims in court that its lawyers at Troutman Sanders turned a blind eye to a political fund raiser who defrauded the bank of nearly $75 million.
     The case revolves around nonparty Hassan Nemazee, 62, an investment banker who “is currently serving a 12-year federal prison term for bank fraud arising out of the fraudulent scheme involving the HSBC Loan,” according to the complaint in New York County Supreme Court.
     HSBC Bank sued Troutman Sanders and Robert Chanis. It says Chanis left Troutman Sanders “by May 2010” and joined the Harris Beach law firm, which is not a party to the complaint.
     “This action for legal malpractice arises out of defendants’ negligent representation of HSBC in a $100 million securities-backed loan transaction (the ‘HSBC Loan’), and their independent breach of the express terms of the agreements governing the parties’ attorney/client relationship,” the complaint states.
     “HSBC retained Troutman and Chanis to negotiate the terms of the HSBC Loan to a prominent political fundraiser and investment banker, Hassan Nemazee (‘Nemazee’). As explained further below, as a direct result of defendants’ negligent acts and/or omissions, either singly or in combination, Nemazee was able to steal $75 million from HSBC after purportedly pledging securities which never existed as collateral for the loan.”
     Nemazee contributed millions to the campaigns of John Kerry, Hillary Clinton and Barack Obama before he was convicted and sent to the slammer.
     According to the complaint, Nemazee pledged phony securities to open a $100 million line of credit at HSBC in February 2009.
     The bank claims that defendant attorney Chanis could not locate one of the signatories to the account control agreement: (nonparty) Anita Parik, who supposedly was an employee of Pershing Advisory Services.
     Chanis allegedly told the bank’s loan adviser in an Aug. 6, 2009 phone call that his assistant, nonparty Linda Fischer, could not confirm that Parik worked at Pershing.
     “I do a lot of hard money lending so I am attuned to fraud and things like that,” Chanis said, according to the complaint. “Listen, and I don’t think that at all here, not in the least, but I just wanted to tell you … my secretary called up and said ‘I need Anita Pari[k]’s phone number – she is signing for Pershing Advisors.’ She says Anita Pari[k] does not work here … so I say ‘Really?’ … So that’s if, if I were lending money for a store or a hedge fund, I would say, ‘Guys you have a problem here.” (Parentheses and ellipses in complaint.)
     Chanis did not mention that the receptionist told Fischer that she never heard of Pershing Advisory Services, either, according to the complaint.
     HSBC claims that Chanis followed up on the matter by merely contacting Nemazee and taking his reply at face value.
     “Chanis took no further steps to investigate the Fischer call and never notified anyone in HSBC’s Office of General Counsel (‘OGC’) of this significant, unusual development,” the complaint states. “Instead, Chanis merely accepted that this crucial information, which had come from Nemazee, was true without making any attempt to verify any of it beyond taking Nemazee at his word.”
     HSBC claims it opened a line of credit for Nemazee on Aug. 24, 2009, and he immediately waltzed with $74.91 million.
     Federal authorities arrested Nemazee the next day and charged him with felony bank fraud, according to the complaint.
     HSBC seeks restitution and consequential damages for legal malpractice and breach of contract.
     It is represented by Lita Beth Wright, with Storch Amini & Munves.

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