The president and the chief financial officer of a now defunct New Jersey-based marble and granite wholesaler have been arrested for allegedly orchestrating and participating in a scheme to defraud a bank in connection with a $17 million secured line of credit, US Attorney Craig Carpenito announced on Wednesday, 16 September.
Rajendra Kankariya, 61, pleaded guilty by video conference before US District Judge Susan D Wigenton to committing wire fraud affecting a financial institution.
From late 2015 to early 2016, Lotus Exim International Inc. (LEI), Kankariya's company, obtained from the victim bank a $17 million line of credit to discharge a prior debt and gain working capital.
The line of credit was to be secured by LEI’s accounts receivable and assets. In reality, however, LEI’s accounts receivable and assets were insufficient to serve as collateral for the line.
Based on presented documents and statements made in court, it has been found that in order to conceal the lack of sufficient collateral, LEI and its employees, including Kankariya, devised a dubious scheme.
They created fake email addresses on behalf of LEI’s customers so they could pose as those customers to answer the bank’s and outside auditor’s inquiries about the accounts receivables.
The scheme involved numerous fraudulent accounts receivable where the outstanding balances were either inflated or entirely fabricated. The scheme caused the victim bank losses of approximately $17 million.
Kankariya is now facing a maximum potential penalty of 30 years in prison and a fine of $1 million or twice the gross gain or loss derived from the offence, whichever is greater.
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