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Monday, May 20, 2024 | Back issues
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Political Fundraiser Admits to $292M Fraud

(CN) - A New York businessman who raised money for Democratic candidates, including Barack Obama and Hillary Clinton, pleaded guilty on Thursday to defrauding three major banks out of $292 million in loans.

Hassan Nemazee, 60, of Manhattan, ran what prosecutors say amounted to a giant Ponzi scheme in which he took out loans from Bank of America, Citibank and HSBC using phony collateral.

"Nemazee orchestrated an elaborate shell game to defraud three major banks, scamming them to the tune of $290 million to finance his posh life and create a reputation as a political kingmaker," U.S. Attorney Preet Bharara said in a statement.

The former CEO of Nemazee Capital falsely claimed to have hundreds of millions of dollars in securities and other assets to back the loans. Authorities say he provided bogus account statements containing forged signatures to trick the banks into loaning him the money.

When Citibank began to question the collateral for Nemazee's $74.9 million loan, Nemazee drew down on his line of credit from HSBC and used the money to pay off Citibank, authorities say.

Nemazee also admitted to having bilked a longtime friend and business associate into putting up his multimillion-dollar Colorado home as collateral for a $100 million line of credit with Bank of America.

Nemazee used the money to buy luxury apartments and property in Italy and New York, and to make political donations at the federal, state and local level.

He told U.S. District Judge Sidney Stein that the scheme began when he was facing "severe financial difficulties."

He pleaded guilty to three counts of bank fraud and one count of wire fraud. He also agreed to forfeit assets totaling $292 million, including bank accounts; his interest in properties on Park Avenue and in Katonah, N.Y. and Rome; a 2008 Maserati; and a 2007 Cessna.

His plea agreement includes a sentencing guideline of up to 19 years and 7 months in prison, though each of his crimes carries a maximum penalty of 30 years in jail.

His sentencing is scheduled for June 30 at 2 p.m.

Nemazee's brother-in-law, Shahin Kashanchi, 46, of Telluride, Co., was charged separately with aiding and abetting the fraud by making the fake account statements that Nemazee used to obtain the loans.

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