DALLAS (CN) – Two men ran off with $33 million after duping U.S. Bank and Texas Capital Bank into funding a $39 million construction loan for an Austin office tower, federal prosecutors say in a criminal information.
Anirudh Sarwal, head of Austin-based East Avenue Office Holdings LP, and Fred Alden Yeo, co-guarantor of the loan, are charged with conspiracy to commit bank fraud.
Prosecutors claim they began negotiating with both banks in August 2008 to fund construction of an eight-story office building next to Interstate 35 in Austin. They lied about their assets and forged bank statements to induce the loan, the United States says.
“Sarwal and Yeo knowingly submitted a fabricated bank statement to U.S. Bank and Capital Bank in or around November or December 2008 purporting to show that Sarwal had more than $7 million in an investment account at Wells Fargo,” according to the information accuing them of conspiracy to commit bank fraud. “Sarwal and Yeo submitted this bank statement knowing that both financial institutions wanted assurance that Sarwal, as co-guarantor on the loan, and Yeo, also a co-guarantor on the loan, collectively had at least $5 million in liquid assets at their disposal. In reality, no such Wells Fargo investment account existed, and the bank statement was a forgery.”
The victimized bank approved the $39 million loan on Dec. 30, 2008, and by the time they foreclosed on it, in June 2010, “Sarwal and Yeo [had] made more than $33 million in draws on construction loan,” according to the information.