Former CFO Sentenced Over Multinational Ponzi Scheme Involving $683 Million

LAWFUEL – Legal Newswire – MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced that ANIL ANAND, the
former Chief Financial Officer of Allied Deals, Inc., was
sentenced today to time served (which amounted to 7 months in
prison), on charges stemming from his participation in a
sprawling, international Ponzi scheme, which resulted in over
$680 million in losses to approximately 20 banks worldwide
(including J.P. Morgan Chase & Co., Fleet National Bank, PNC
Bank, N.A., KBC Bank, N.V., Hypo Vereins Bank, N.A., Dresdner
Bank Lateinamerika AG, China Trust Bank, and General Bank).
ANAND had pleaded guilty in December 2002, pursuant to an
agreement to cooperate with the Government, to participating in
the Ponzi scheme by, among other things, inducing banks to issue
hundreds of millions of dollars in loans. United States District
Judge RICHARD M. BERMAN, who imposed the sentence in Manhattan
federal court, also ordered ANAND to pay forfeiture of
$600,000,000 and restitution of $683,632,800. According to
documents filed and the evidence at trial in this and related
cases in the Southern District of New York and the United

Allied Deals, Inc., Hampton Lane, Inc., and SAI
Commodity in the United States and RBG Resources in the United
Kingdom (collectively, the “Allied Deals companies”) purported to
be in the business of brokering trades in non-ferrous metals.
The Allied Deals companies were controlled by brothers NARENDRA
RASTOGI, in the United States, and VIRENDRA RASTOGI, in the
United Kingdom. As part of their business, the Allied Deals
companies purportedly would arrange for sales between buyers and
sellers of metal in legitimate, “arms-length” transactions
(transactions negotiated by unrelated parties, each acting in
his/her own best interest). To finance those metal sales, the
defendants then arranged for loans with banks, usually to be
repaid after 180 days. As collateral for the loans, the banks
relied on Allied Deals’ accounts receivables (the money that
Allied Deals was due from the customers for the metal
transactions), expecting that the loans would get repaid when the
customers repaid Allied Deals for the metal that had been

In fact, hundreds, if not thousands, of metal
transactions upon which the loans were based simply did not
exist. ANAND, the RASTOGI brothers, and their co-conspirators
had set up and controlled an elaborate network of hundreds of
sham, nominee companies around the world (which they called
“group companies”) to serve as fake purchasers of metal from
Allied Deals so that the defendants could get loans from the
victim banks.

The RASTOGIs and their co-conspirators used loan
proceeds from one victim bank to make the loan payments required
by another victim bank, while concealing that the newly-issued
loans were not being used to fund actual, arms-length metal
transactions and that the money used to pay off the loans had not
been provided by the buyers of metal in bank-financed sales.
The co-conspirators went to extraordinary lengths to
mislead and convince banks into believing that the sham,
“controlled” customers were in fact real, independent companies
with actual employees and offices and with no ownership or
control relationships with the defendants. Among other things, a
number of co-conspirators posed as Allied Deals customers,
established offices and phone lines for the sham companies in the
United States and abroad, arranged for fake letterhead and bank
accounts, and were prepared to field calls from bankers or

Among other things, ANAND was involved in helping the
RASTOGIS establish a number of the sham “controlled” customers
that were central to the scheme, by recruiting a number of his
friends to set up fake metal companies in New Jersey, New York
and California. ANAND and his co-conspirators at Allied Deals
then used these fake customers to generate millions of dollars in
sham accounts receivables, which they used as collateral to
obtain millions of dollars in loans from the victim banks.

To further the appearance that Allied Deals’ customers
were real, independent, metal companies, ANAND helped to
establish fake credit histories for the sham customers. He also
supplied sham customers with false financial data that was then
provided to credit agencies to further the facade that the
customers were real, bona fide metal companies engaged in real,
bona fide metal trades.

As part of the fraud, the co-conspirators established a
fake credit reporting agency, which generated false credit
reports attesting to the credit-worthiness of the sham companies.
These credit reports were kept in a series of “credit files” that
Allied Deals maintained for each of its sham customers, which
files could be shown to banks and/or auditors to further the
deception that they were real customers.

Allied Deals employees forged many of the documents
that the banks required in order to obtain loans. For example,
the documentation department created fake purchase contracts at
Allied Deals’ office in New Jersey, cut and paste signatures for
the purported customer, and faxed the documents between fax
machines at Allied Deals, in order to make it appear that the
documents had come from overseas. Allied Deals employees also
routinely forged such key shipping documents as steamship line
bills of lading, and Chamber of Commerce certificates of origin.
ANAND also participated in key meetings with bank
officials, during which he and his co-conspirators made
representations regarding the nature of Allied Deals’ metal
transactions in order to obtain millions of dollars in loans.

The RASTOGI brothers and their co-conspirators also
shipped the same metal between multiple customers at different
ports around the world, using each repeated metal transaction to
support an additional loan. To increase the declared value of
the metal being shipped (and thus the amount of each loan),
Allied Deals employees also falsely represented on the bill of
lading the type of metal in a particular container — stating,
for example, that a particular container contained an expensive
metal, such as cobalt, when it in fact contained a cheaper metal,
such as lead.

The defendant and his co-conspirators also used
the same collateral for two different loans by submitting
purportedly “original” bills of lading to more than one bank.
In the Spring of 2002, several of the defendants in the
United States were assigned the task of fielding telephone calls
from auditors or bankers, while posing as a representative of one
or more of the sham companies in the United States. To
facilitate this effort, the co-conspirators obtained a number of
cellular telephones, each of which was assigned to a particular
sham company. A number of Allied Deals employees then fielded
calls from bankers, falsely assuring them that the amounts due
would be repaid.

Fifteen defendants have been arrested in the United
States in connection with this case. Nine — including ANAND —
pleaded guilty; five were found guilty at trial; and one was
acquitted. Two defendants in the U.S. case remain at large.
ANAND pleaded guilty to one count of conspiracy, one
count of bank fraud, one count of conspiracy to commit money
laundering, one count of tax evasion, and one count of making
false statements to federal agents.

As part of his cooperation, ANAND testified in 2004 in
New York against six of his co-defendants five of whom were
convicted after trial. As a further part of his cooperation,
ANAND testified in London in the fall of 2007 at the UK trial of
VIRENDRA RASTOGI and three others. That trial recently ended in
the conviction of three of the defendants, including VIRENDRA
RASTOGI. On June 5, 2008, VIRENDRA RASTOGI was sentenced to a
term of 9 1/2 imprisonment.

ANAND, age 46, resides in Plainsboro, New Jersey.
Mr. GARCIA thanked the Federal Bureau of Investigation
and the United Kingdom’s Serious Fraud Office for their
assistance in this investigation and prosecution.
This prosecution is being handled by the Major Crimes
Unit of the United States Attorney’s Office. Assistant United
States Attorney MARCUS A. ASNER is in charge of the prosecution.
08-148 ###

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