Fundraiser Nemazee Sentenced to 12 Years for $292 Million Fraud on Banks
Hassan Nemazee, a fundraiser for President Barack Obama and Secretary of State Hillary Clinton, was sentenced to 12 years in prison for cheating Citigroup Inc., HSBC Holdings Plc and Bank of America Corp. of $292 million.
Calling the case a “Shakespearean tragedy,” U.S. District Judge Sidney Stein in New York also ordered Nemazee to pay restitution of $292 million to the three banks. Nemazee may remain free until he reports to prison by Aug. 27, Stein said.
“Pride, ego, arrogance, self-image, self-importance -- all of this and more are among the reasons why I turned down this destructive path,” Nemazee told the judge before he was sentenced. “At the end of the day, there is no logical reason” for the crime, Nemazee said.
Nemazee, 60, pleaded guilty in March to four fraud counts, admitting he used stolen funds to live a lavish lifestyle, to donate to political candidates and charities, and to buy and maintain real estate.
When he pleaded guilty, Nemazee said his fraud began in the mid-1990s as he faced mounting financial difficulties. He admitted using forged documents to borrow from banks. He couldn’t repay the lenders as he intended because his investments went bad, he said.
Nemazee raised at least $100,000 for Clinton’s 2008 presidential campaign, brought in more than $500,000 for Obama after Clinton lost in the primary campaign and raised at least $1 million for dozens of others, disclosure statements show.
President Bill Clinton in 1999 nominated Nemazee to be U.S. ambassador to Argentina. The nomination was withdrawn after a news report raised questions about his finances.
“The crime is breathtaking in its brazenness, in its scope,” Stein said in court, noting his family’s heritage. “The proud name Nemazee also involves your being a federal felon. That’s really the tragedy.”
Assistant U.S. Attorney Daniel Levy called for a prison term of 15 1/2 to 19 1/2 years, citing the “staggering loss” in what the government has called a Ponzi scheme in which proceeds from one bank were to repay others.
“There are hundreds of acts of deception,” Levy said of a fraud scheme that began in 1998.
Nemazee repaid some of what he owed to Bank of America with funds he got from Citibank and drew on a line of credit at London-based HSBC to repay Citibank, prosecutors said.
“Part of the manner in which the defendant was able to dupe the banks into lending him substantial sums of money was to trade on his substantial reputation in political circles as a prodigious fundraiser,” the government said in court papers.
Stein cited more than 120 letters written on Nemazee’s behalf in handing down a shorter sentence than recommended.
The letters -- including one from longtime friend Alan Quasha, Nemazee’s former business partner and a victim of his scheme -- cited Nemazee’s charity, his involvement in the political process and his concern for fellow Iranian-Americans, Stein said.
The judge called Nemazee’s scheme “simplistic” and “bound to fail” and said he wanted to impose a sentence that would deter others.
Defense attorney Paul Shechtman told the judge that a banker recently asked Nemazee why he had made such risky investments. Nemazee told the banker he wanted “to hit a home run” so he could repay lenders, the lawyer said. “He didn’t,” Shechtman said.
Prosecutors have hired a forensic expert to help locate Nemazee’s assets. They are investigating whether he stashed any overseas. The government assailed him in court papers for failing to cooperate in its investigation.
Assistant U.S. Attorney Michael Lockard valued Nemazee’s Manhattan apartment on Park Avenue at $16.5 million, his estate in Katonah, New York, at $2.1 million, and two other New York apartments at more than $2 million each. Nemazee also owns real estate in Italy.
Prosecutors recovered $93.5 million in cash and securities, including $75 million that Nemazee took from an HSBC line of credit shortly before his arrest last August, they said. The government is seeking the return of political and charitable donations to more than 100 organizations, Lockard said.
Park Avenue Apartment
Sheila Nemazee, the defendant’s wife, and other family members are contesting part of the forfeiture efforts, claiming assets such as the Park Avenue apartment as their own.
Nemazee invested alongside Quadrant Management Inc., run by Quasha, to buy Carret Asset Management LLC in 2004. Quasha discovered that Nemazee forged his signature in 2008 on a line of credit to draw down millions of dollars, Quasha said in an interview earlier this year.
Nemazee’s brother-in-law, Shahin Kashanchi, owner of a home electronic-equipment installation business in Colorado, has been indicted for helping Nemazee in his fraud. Prosecutors said Nemazee paid Kashanchi $500 on several dates to fabricate documents. Kashanchi denies wrongdoing. At today’s sentencing, Nemazee said he deceived Kashanchi along with other family members.
“For the rest of my life, I will seek to atone for my actions,” he said.
The Nemazee case is U.S. v. Nemazee, 1:09-cr-00902, and the Kashanchi case is U.S. v. Kashanchi, 1:10-cr-00085, U.S. District Court, Southern District of New York (Manhattan).