Indian mastermind of $680mn fraud gets off lightly

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New York, June 19:: An Indian-origin man who masterminded a major international fraud that led to USD680 million in losses to 20 banks worldwide has escaped with a lighter sentence of seven months in prison, the time he has already served.

Anil Anand, former chief financial officer of Allied Deals Inc - a metals trading firm, was also asked by US District Court to pay USD 683.6 million in restitution.

Anand, 46, had pleaded guilty to the charges in 2002 and faced up to 30 years in prison but escaped with a lenient sentence because he cooperated with prosecutors which resulted in the arrest at least 15 people.

The defrauded banks, located in the United States, Europe and Asia, included JPMorgan Chase & Co, Fleet National Bank; PNC Bank; Dresdner Bank Lateinamerika AG; China Trust Bank; and Hypo Vereins Bank.

US District Attorney for Southern District of New York Michael J Garcia said Allied Deals companies were controlled by brothers Narendra Rastogi in the US and Virendra Rastogi in Britain.

Anand and the Rastogi brothers and their co-conspirators had set up and controlled an elaborate network of hundreds of sham, nominee companies around the world to serve as fake purchasers of metal from Allied Deals so that the defendants could get loans from the victim banks.

But the prosecutors said "hundreds, if not thousands," of metal transactions upon which the loans were based simply did not exist.

The accused 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 prosecutors alleged.

"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,"

Garcia said.

Prosecutors say Anand was involved in helping the brothers establish a number of the sham customers that were central to the scheme. He had recruited a number of his friends to set up fake metal companies in New Jersey, New York and California.