E-Paper
The $500 million loan ‘scam’: How Indian-origin CEO Bankim Brahmbhatt ‘defrauded’ Blackrock
The lenders have accused Bankim Brahmbhatt of fabricating accounts receivable that were meant to be used as loan collateral and filed a lawsuit against the CEO.
Bankim Brahmbhatt, the Indian-origin CEO of US-based companies Broadband Telecom and Bridgevoice, has been accused of “breathtaking” financial fraud as investment firm BlackRock's private credit arm and other lenders try to recover more than $500 million lost in a loan fraud.
The lenders have accused Brahmbhatt of fabricating accounts receivable that were meant to be used as loan collateral and filed a lawsuit against the CEO in August, The Wall Street Journal reported. The lawsuit alleges that Brahmbhatt’s firms created a false impression of financial health on paper while transferring money offshore to India and Mauritius.
Brahmbhatt denies the fraud allegations, his lawyer reportedly said.
ALSO READ | Real estate deals, ‘high’ returns, 100 victims: Indian-origin ‘glam’ couple held for $4 million scam in US
Where it all began
The alleged fraud dates back to September 2020, when the world’s largest asset manager, BlackRock’s credit giant HPS, started lending to at least one financing arm linked to Brahmbhatt’s telecom firms, WSJ reported.
The debt investment was raised by HPS to around $385 million in early 2021, and then again to around $430 million in August 2024.
According to the report, French multinational bank BNP Paribas helped finance the loans HPS provided to Brahmbhatt’s entities. The bank, which is one of Europe’s largest lenders, has refused to comment publicly on the matter so far.
How the Indian-origin CEO ‘defrauded’ lenders
According to what an HPS employee found out in July, there were irregularities with a few email addresses that appeared to come from Carriox customers, people familiar with the matter told WSJ.
These emails originated from fake domains imitating real telecom companies, and a review of previous emails revealed similar issues, the lenders said in their lawsuit.
When HPS officials questioned Brahmbhatt about the alleged irregularities, he reportedly assured them that there was nothing to worry about. However, he stopped answering their calls soon after.
After a representative of HPS visited the offices of Brahmbhatt’s companies in July, they were found closed.
Court documents, according to the report, showed that most of the email addresses failed to match the public web domains of the supposed customers. “This is indeed a confirmed fraud attempt,” one of the customers, a BICS security staffer, told a lawyer from the firm Quinn Emanuel, the WSJ report said.
As per the complaint, the lenders found that every customer email provided to them by Brahmbhatt’s companies over the past two years was fake. They also found fraudulent contracts from customers dating back to 2018.
ALSO READ | Indian couple in Texas charged in $4M scam. How the Mukherjees duped over 100 people
“Brahmbhatt created an elaborate balance sheet of assets that existed only on paper,” the lawyers representing the lenders said.
Brahmbhatt moved assets to India and Mauritius?
The lawsuit also claimed that Brahmbhatt moved assets meant to be used as collateral to offshore accounts in India and Mauritius.
Notably, Brahmbhatt’s telecom firms declared bankruptcy in August. Last week, Carriox Capital II and another finance company joined the case in bankruptcy court.
Where is Bankim Brahmbhatt?
According to the report, HPS has informed some clients that they believe Brahmbhatt is currently in India.
The ‘missing’ CEO, who had agreed to the lenders’ demand to provide a personal guarantee for the loans, filed for bankruptcy on August 12, the same day his telecom firms applied for Chapter 11 protection.
Notably, Chapter 11 of the United States Bankruptcy Code mainly allows for the reorganisation of a business. Under this, the debtor remains “in possession,” holds the powers and responsibilities of a trustee, and can continue operating the business. With the court’s approval, the debtor may also borrow new funds.
A reorganisation plan is then proposed, and creditors whose rights are affected can vote on it. The court may authorise the plan if it receives enough votes and meets the required legal conditions.
