Legal•Info

Former Political Fundraiser Sentenced to 12 Years in Bank Fraud Case

Posted: Wednesday, September 8th, 2010 at 1:01 pm

A former finance chairman for both the Democratic Senatorial Campaign and Hillary Clinton’s 2008 presidential campaign has been sentenced to 12 years in prison for perpetrating a $300 million Ponzi scheme.

Hassan Nemazee, 60, pleaded guilty in March to one count of wire fraud and three counts of bank fraud. According to prosecutors, the investment banker forged signatures and created false account statements in order to obtain loans from big-name banks such as Citigroup, Bank of America and HSBC Holdings PLC, from 1998 to 2009. These statements outlined “hundreds of millions of dollars in collateral, in the form of securities and other assets, which he did not own,” said the U.S. attorney’s office.

Nemazee was able to sustain the scam for over a decade by making partial repayments on loans issued by Bank of America using money from Citibank, and vice versa. As of August 2009, he owed approximately $142 million to Bank of America and $74.9 million to Citibank.

With the money he obtained through the fraud, Nemazee purchased a yacht, a private plane and property in Rome and Perugia, Italy. He also maintained a 12-acre estate in Katonah, New York and a Park Avenue apartment.

Additionally, Nemazee made donations to political campaigns, political action committees and charities. In addition to his ties to Hillary and Bill Clinton, he also served as the New York Finance Chair for John Kerry’s 2004 presidential campaign and donated the maximum allowable amount of $50,000 to Barack Obama’s Presidential Inauguration Committee.

United States District Judge Sidney H. Stein, who sentenced Nemazee to the term of 12 years in prison—slightly less than the 15 months which prosecutors had requested—also ordered him to pay restitution of more than $292 million to the defrauded banks, and to serve three years of supervised release following his time in prison.

During the sentencing hearing, Judge Stein called Nemazee’s fraud “breathtaking in its brazenness and its scope.”

Also charged in the Ponzi scheme is Shahin Kashanchi, 47, Nemazee’s brother-in-law. Kashanchi was indicted on charges of aiding and abetting the bank fraud, by creating the fake account statements and other documentation that Nemazee used to obtain the loans. His case is pending in Manhattan federal court.

After the sentencing, U.S. Attorney Preet Bharara said, “For over a decade, Hassan Nemazee authored a fantastic fiction, stealing $292 million by acting the part of wealthy and influential power broker. In the end, Justice is blind to political affiliations and powerful connections, and today, like any other defendant, Nemazee faces the stark consequences of his decision to violate the law.”

The financier is ordered to surrender for his prison term on August 27, 2010.

 

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