Cheating
Fundraiser Nemazee gets 12 years for Citi, HSBC fraud
Hassan Nemazee, a fundraiser for President Barack Obama and Secretary of State Hillary Clinton, was sentenced to 12 years in prison for cheating Citigroup Inc.,HSBC Holdings Plc and Bank of America Corp. of $292 million.
U.S. District Judge Sidney Stein in New York today imposed the punishment, including restitution of $292 million to the three banks. Nemazee can remain free until he reports to prison by Aug. 27, Stein said.
"Pride, ego, arrogance, self-image, self-importance -- all of this and more are among the reasons why I turned down this destructive path," Nemazee told the judge before he was sentenced.
Nemazee, 60, pleaded guilty in March. The government asked for a prison term of 15 1/2 to 19 1/2 years, saying he ran a Ponzi scheme that used proceeds from one bank loan to pay others.
"Part of the manner in which the defendant was able to dupe the banks into lending him substantial sums of money was to trade on his substantial reputation in political circles as a prodigious fundraiser," the government said in court papers.
Nemazee mingled with prominent and powerful politicians, and, according to the government, the banks thought he was "an important person in political circles."
Hillary Clinton, Obama
He raised at least $100,000 for Clinton's 2008 presidential campaign, brought in more than $500,000 for Obama after Clinton lost in the primary campaign, and raised at least $1 million for others, disclosure statements show.
Nemazee is a Harvard University graduate whose father was a philanthropist who founded a hospital in Shiraz in Iran during the reign of Shah Mohammad Reza Pahlavi.
"The proud name Nemazee also involves your being a federal felon," the judge said today as he imposed the sentence. "That's really the tragedy."
President Bill Clinton in 1999 nominated Nemazee to be U.S. ambassador to Argentina. The nomination was withdrawn after a news report raised questions about his finances.
When he pleaded guilty, Nemazee said his fraud began in the mid-1990s as he faced mounting financial difficulties. He admitted using forged documents to borrow from banks. He couldn't repay the lenders as he intended because his investments went bad, he said.
Asset Hunt
Prosecutors have hired a forensic expert to help locate Nemazee’s assets. They are investigating whether he stashed assets overseas. The government assailed him in court papers for failing to cooperate in its investigation.
Assistant U.S. Attorney Michael Lockard valued Nemazee's Manhattan apartment on Park Avenue at $16.5 million, his estate in Katonah, New York, at $2.1 million, and two other New York apartments at more than $2 million each. Nemazee also owns real estate in Italy.
Prosecutors recovered $93.5 million in cash and securities, including $75 million that Nemazee took from an HSBC line of credit shortly before his arrest last August, they said. The government is seeking the return of political and charitable donations to more than 100 organizations, Lockard said.
Sheila Nemazee, the defendant's wife, and other family members are contesting part of the forfeiture efforts, claiming assets such as the Park Avenue apartment as their own.
Nemazee repaid some of what he owed to Bank of America with funds he got from Citibank and drew on a line of credit at London-based HSBC to repay Citibank, prosecutors said.
Donations, Purchases
Nemazee used stolen funds to make donations to candidates, political action committees and charities, to buy real estate, and to make monthly maintenance payments on properties, prosecutors said.
He invested alongside Quadrant Management Inc., run by his longtime friend Alan Quasha, to buy Carret Asset Management LLC in 2004. Quasha discovered that Nemazee forged his signature in 2008 on a line of credit to draw down millions of dollars, Quasha said in an interview earlier this year.
Nemazee's brother-in-law, Shahin Kashanchi, owner of a home electronic-equipment installation business in Colorado, has been indicted for helping Nemazee in his fraud. Prosecutors said Nemazee paid Kashanchi $500 on several dates to fabricate documents. Kashanchi denies wrongdoing.
The Nemazee case is U.S. v. Nemazee, 1:09-cr-00902, and the Kashanchi case is U.S. v. Kashanchi, 1:10-cr-00085, U.S. District Court, Southern District of New York (Manhattan).
(Published by Bloomberg – July 15, 2010)