Obama fundraiser faces new fraud suit
HSBC says it lost $75m
September 21, 2009
By David Glovin and Kambiz Foroohar New York
HSBC Holdings said at the weekend it was a victim of a $75 million (R556.6m) fraud by Hassan Nemazee, a top fundraiser for US President Barack Obama and Secretary of State Hillary Clinton, who was arrested last month for defrauding Citigroup.
The US unit of HSBC filed a $75m fraud lawsuit against Nemazee in New York State Supreme Court in Manhattan.
The suit, filed on September 2, came a week after Nemazee was arrested by the FBI for cheating Citigroup out of $74m.
According to prosecutors, Nemazee repaid $74m he stole from Citigroup by tricking another bank to lend him the money on August 24.
That came a day after he was questioned by the FBI about the alleged Citigroup scam and the day before he was arrested. Prosecutors did not identify the second bank in an account that corresponds to the allegations in the complaint by HSBC Bank USA.
"On August 24, Nemazee drew down $75m of his available $100m in credit from HSBC," the London-based bank said in its fraud and breach-of-contract complaint.
"Later that day, Citibank, which sometime prior to August 23 began to co-operate with federal law enforcement officials concerning Nemazee's activities, accepted a wire transfer from Nemazee repaying Nemazee's loan to Citibank, which at that time amounted to more than $74m."
Juanita Gutierrez, an HSBC spokeswoman, confirmed that the bank had sued Nemazee. She declined to comment on whether the bank was the same one identified in court papers by prosecutors.
Nemazee, the chairman of Nemazee Capital, is under house arrest in his $20m Manhattan apartment on a $25m bond. He has not entered a formal response to the criminal charges. His lawyer, Paul Shechtman, could not be reached for comment.
The financier was one of the leading fundraisers for the Democratic Party. In last year's presidential campaign, he raised at least $100 000 for Clinton, according to the Washington watchdog group Public Citizen. He then brought in at least $500 000 for Obama after he defeated Clinton in the primary campaign, according to Public Citizen.
Nemazee also raised money for Massachusetts senator John Kerry during his 2004 run for the presidency.
In the criminal case, he is accused of using phony documents to trick Citigroup's Citibank unit into lending him as much as $74m by telling the bank he held accounts with hundreds of millions of dollars that could serve as collateral.
Documents submitted by Nemazee cited accounts that either never existed or had been closed years before.
On September 1, Manhattan prosecutors said in a letter to a judge that Nemazee used the same scheme to defraud the second bank. - Bloomberg
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