Another Arrest in $290M Fraud Against Citibank and HSBC

Shahin Kashanchi was arrested a couple of days ago on charges of scheming with his brother-in-law Hassan Nemazee to defraud Citibank and HSBC of $290 million. Nemazee was arrested on August 25, 2009 and indicted for using fraudulent documents to secure loans from the victim banks, and executing a ponzi scheme against them by paying partial proceeds of the loans from one bank to the debts owed to the other and likewise.

 

Many of the fraudulent documents used in Nemazee's scheme were allegedly created by Kashanchi. Kashanchi would create fraudulent bank statements to help Nemazee secure additional loans, tricking the banks into thinking that funds existed to back the loans. Kashanchi allegedly also aided in fraudulent communications with the banks.

 

Kashanchi's charges of two counts of bank fraud each carry a maximum prison term of 30 years and a maximum fine of $1 million, or twice the gain or loss of the crime.

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