Panama Papers: Thickest file is on NRI hedge fund manager in US prison

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New Delhi | Published: April 8, 2016 10:37:29 AM

The assets of FCCF are listed as the balance in a bank account and 100% of the shares of an offshore Panamanian Corporation bought in 2007 named Opler Company Consulting Corp with a bank account in the Wintherbotham Merchant Bank of Bahamas.

Chetan Kapur, an Indian-born hedge fund manager settled in New York, is serving a jail term in the US for alleged fraud.Chetan Kapur, an Indian-born hedge fund manager settled in New York, is serving a jail term in the US for alleged fraud.

THE MOST voluminous bunch of documents in The Panama Papers relating to Indian names belongs to brothers Chetan Kapur and Kabir Kapur and their entity, the “Family and Children Charitable Foundation (FCCF)” incorporated by Mossack Fonseca in Panama in 2010.

Chetan Kapur, an Indian-born hedge fund manager settled in New York, is serving a jail term in the US for alleged fraud.

In the MF documents, investigated by The Indian Express, the “assets” of the Foundation are listed as the balance in a bank account (Swiss private bank Bank Vontobel AG) and 100% of the shares of an offshore Panamanian Corporation bought in 2007 named Opler Company Consulting Corp with a bank account in the Wintherbotham Merchant Bank of Bahamas.

There are 499 sets of documents in the Kapur files and they show that Opler, a “vintage offshore company,” was purchased by Chetan Kapur from Mossack Fonseca for $ 6,750 in 2007. And it was only three years later that the FCCF was set up.

Opler itself was struck off MF records in 2012 and, interestingly, in November 2012, there are detailed email exchanges showing that there was a request that the Beneficial Owner and protector of FCCF be changed from Chetan Kapur to Kabir Kapur.

For, from 2011 on, Chetan Kapur, who was running several investment companies in the USA, including a flagship company, ThinkStrategy Capital Management LLC, was under investigation for alleged fraud. In January 2013, he was indicted by the US Securities and Exchange Commission (SEC) and ordered to pay $ 4.95 million in fines and barred from the securities, brokerage and investment business.

The SEC said that Chetan Kapur “engaged in a pattern of deceptive conduct designed to bolster their track record, size, and credentials…”.

In July 2013, he was given a 13-month prison term.

More recently, on July 2, 2015, a US Federal Court ordered him back in jail for failing to pay $ 10 million to the SEC and others and cited “compelling evidence” that the defunct hedge fund manager (Chetan Kapur) had significant access to assets to pay the penalties, including “millions of dollars” in offshore accounts.

One email dated November 20, 2012 between officials of the Mossfon Trust, of Mossack Fonseca, reads: “Our client informed us that the reason for the change in the beneficial owner is that he cannot devote enough time to the Foundation; therefore he has transferred the beneficiary and protector of the Foundation to his brother, Mr Kabir Kapur…”

The next day, there is an email clarifying that “please inform Mr Chetan Kapur of the fact that after change of beneficial owner on the account, he will have no access nor right to any information from our side…”

In the documents provided to MF for due diligence and ownership change, Kabir Kapur is described as a “corporate consultant.”

MF records show his address as in Mumbai and annual income as $ 100,000. The expected turnover in the offshore account is listed as between CHF (Swiss Francs) 500,000 to CHF 1 million. In subsequent mails, Kabir Kapur himself frequently invokes attorney-client privilege and asserts that no correspondence or files should have any information or reference to CK (Chetan Kapur).

A crucial record is dated July 6, 2015 — four days after the US court ordered Chetan Kapur back in jail. It shows a request from Kabir Kapur to MF account managers to provide him with a notarised letter/affidavit with the email stating “please provide the letter today as it is the key towards showing that Chetan does not have access to the Foundation assets — which in turn is KEY (emphasis his) towards making sure he does not get detained on July 7 for coercive civil contempt.”

The draft affidavit prepared by him reads: “Chetan Kapur has no interest in and is not a beneficiary of the Family and Children Charitable Foundation, a private Panamanian Foundation founded in October 2010…”

After Chetan Kapur’s incarceration is ordered, Kabir Kapur shoots off even more persuasive mails (also July 2015) asking MF managers to arrange for letters from Swiss prosecutors stating that Chetan Kapur has “never been the beneficial owner of the assets of Family and Children Charitable Foundation.”

He also informs that “they (lawyers of the US Securities and Exchange Commission) are interested in the Foundation since they have access to a few KYC emails of May/June 2010 when the Foundation was set up and that they “see” two loans given by the Foundation to one Bina Rai in August 2011 and January 2012 from her bank account statements.

Significantly, Bina Rai is added as a “substitute beneficiary” in the FCCF in 2012 with Kabir Kapur listed as the Principal Beneficiary in the addendum.

Records show that one loan given by FCCF to Bina Rai via the escrow account is for $ 72,000 with a maturity date of 2022 and the other is for $ 50,000 with a maturity date of 2024.

A third loan is given for $ 23,000 in 2014 also with a maturity date of 2022. The documents state that the loans are for Bina Rai’s Inspiration Gallery of Fine Arts LLC.

In his July 2015 emails, Kabir Kapur again refers to these loans and states that “Bina used only a small part of these loans to help Chetan in his time of need with loans. The rest was used for her own business and personal needs…”

Also important is the email correspondence which shows that to wipe out any trace of the FCCF, Kabir Kapur proposed transferring its assets to a new Foundation.

The name picked by him is ABCD Foundation and in emails dated between June 25 and 30, 2015 titled “New foundation” he gives instructions that the assets of the Family and Children Charitable Foundation should be transferred to the ABCD Foundation and “we will no longer need the old Foundation thereafter…”

Kabir Kapur, contacted in Mumbai, told The Indian Express: “Since 2011, I am a US citizen and thus was a US citizen when my name was added to the Foundation in 2012. I would also like to point out that while Opler Consulting Company Corp has since been wound up, the FCCF still exists as a Panamanian Foundation. As far as my brother Chetan Kapur is concerned, he is still in prison in the US. We have got no justice in this case from any quarter.”

An Investigation by The Indian Express with International Consortium of Investigative Journalists & Suddeutsche Zeitung, Munich

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