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A 55-year old Indian has been charged with investment fraud and money laundering for trying to defraud an investor of more than USD 1.5 million.
Rajesh Patel of Georgia pleaded not guilty to the charges when he was arraigned in US District Court yesterday, US Attorney David Rivera said.
A federal grand jury had last week indicted Rajesh Patel on five counts of wire fraud, one count of mail fraud and four counts of money laundering.
According to the indictment, Rajesh Patel schemed to defraud an investor of more than USD 1.5 million in connection with two investments in hotel properties. Patel faces up to 20 years in prison on each fraud count and up to 10 years in prison on each money laundering count in addition to potential fines and forfeiture of any money or property derived from the fraud.
"Investment fraud schemes cause irreparable harm across a broad spectrum—to the individual investors who lose their savings to such schemes, to small businesses trying to raise capital legitimately, and to the integrity of our economy as a whole," Rivera said.
Investigators allege that in one investment involving the purchase of a hotel building, Patel misrepresented to the investor that he had successfully bid on and acquired the mortgage when he had not even placed a bid on the property.
Instead, Patel used the USD 500,000 provided by the investor for his personal and unrelated purposes.
The indictment also alleges that Patel induced the same investor to invest an additional USD 750,000 in a partnership formed by Patel to purchase a beach front hotel in South Carolina. In exchange for his investment, Patel promised the investor a 25 per cent ownership interest in the hotel partnership.
However, after collecting the investor's funds, Patel revised the partnership's operating agreement to remove any reference to the investor and his ownership interest.
He used the money provided by the investor to reduce an unrelated personal loan in his own name and shifted the remaining proceeds to an account under his control through a series of transfers and deposits.