In New York Tuesday, the U.S. Attorney's Office and the FBI announced that they have uncovered a sophisticated international scheme to defraud major banks out of more than $600 million.
The alleged scheme was simple enough. Four men, Narenda Kumar Kastogi, Anil Anand, Manoj Nijhawan and Udhay Shankar, told various banks that they needed loans to finance metal trades involving parties in India, Hong Kong, Singapore, and the United Arab Emirates. They provided the banks with all of the paperwork for such trades. But the loans were false. Neither the buyer in the trade, nor the seller, nor the metal itself, existed.
U.S. Attorney James Comey explains how an official at J.P. Morgan Chase, one of the "victim" banks, caught onto the scam.
"An alert representative of that bank who got suspicious took a walk one day and went to check out an outfit called 'Island Metals', which was allegedly one of the suppliers, one of the sellers of metal that had received $1.2 million in Chase money," he said. "What he found was a nondescript Manhattan office building, a door with a peep-hole in it, and a tiny little sign that said "Island Metals" on it. Not the kind of entrance way that Chase officials expected to find for someone who had $1.2 million of their money."
The U.S. Attorney's office says that the defendants would sometimes use loans from one bank to pay the debts owed to another bank. The banks include the China Bank Trust, the Hypo Vereins Bank and the Dresdner Bank Lateinamerika.
One of the men charged is a naturalized U.S. citizen. The other three are Indian nationals with permanent legal residency.
The men will be charged with conspiracy to commit bank fraud, mail fraud and wire fraud, and face penalties of up to five years' imprisonment and $250,000 in fines.
Prosecutors say the investigation will continue as they pursue other conspirators in the international scam.