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Indian-Origin CEO Accused of $500M Fraud Targeting BlackRock
31 Oct
Summary
- Bankim Brahmbhatt accused of fabricating accounts receivable as loan collateral
- Fraud targeted BlackRock's private credit arm and other lenders
- Brahmbhatt's companies owe over $500 million to lenders
In a major financial scandal, an Indian-origin CEO is at the heart of a $500 million fraud that targeted the world's largest investment firm, BlackRock. According to the Wall Street Journal, Bankim Brahmbhatt, the owner of US-based telecom companies Broadband Telecom and Bridgevoice, has been accused of fabricating accounts receivable that were used as loan collateral.
BlackRock's private credit investment arm, HPS Investment Partners, is now trying to recover the money after falling victim to what it calls a "breathtaking" fraud. The lenders have accused Brahmbhatt's companies of owing them over $500 million. Investigations revealed that the funds from the loans were diverted to offshore accounts in India and Mauritius.
The fraud came to light when the verification process of the account receivables started. HPS, which was recently acquired by BlackRock, had been lending to Brahmbhatt's companies since September 2020. Several of Brahmbhatt's firms, including the invoice financing company Carriox Capital, have since filed for bankruptcy protection in the US.
Lawyers for the lenders allege that Brahmbhatt used fake invoices, contracts, and emails over the past two years to make it appear as if the money was owed to established telecom companies. When confronted, Brahmbhatt initially assured HPS that nothing was wrong, but later stopped responding to their calls.
