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, U.S. Attorney Craig Carpenito announced.
Rajendra Kankariya, 61, of Tenafly, New Jersey, and Rakesh Sethi, 44, of Basking Ridge, New Jersey, are charged by complaint with one count each of conspiracy to commit wire fraud affecting a financial institution. Both defendants made their initial court appearances today before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and were each released on $500,000 bonds secured by property.
According to documents filed in this case and statements made in court:
From late 2015 to early 2016, Lotus Exim International Inc. (LEI) 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, LEI’s accounts receivable and assets were insufficient to serve as collateral for the line.
In order to conceal the lack of sufficient collateral, LEI and its employees, including Kankariya and Sethi, devised a scheme to create fake email addresses on behalf of LEI’s customers so they could pose as those customers and 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.
Conspiracy to commit wire fraud affecting a financial institution carries 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 offense, whichever is greater.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to these charges.
The government is represented by Assistant U.S. Attorney Sammi Malek of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.