Maybe it’s Bernie Madoff, or we’re just paying closer attention, but Ponzi schemes seem to be popping up everywhere. The U.S Attorney’s office issued indictments for two multi-million dollar Ponzi schemes in the New York area Monday.
The first Ponzi scheme of the day was a fraud involving ATM machines. According to the feds, two men solicited more than $80 million worth of investments in 4,000 ATMS placed in convenience stores, gas stations, and malls around the country. They promised revenues based on ATM fees (don’t we love those!) and issued false statements of investment returns. Turns out that the men had purchased fewer than 400 ATMs – the rest of the revenues were were based on a giant Ponzi scheme.
The second fraud of the day was far more worrisome – not only because it allegedly cost investors $292 million, but because the victims were Bank of America, Citibank, and HSBC (and all the people who keep their money with them). And because the alleged perpetrator is well-connected member of the Democratic political establishment.
Hassan Nemazee, a multimillionaire Iranian-American investment banker who most recently served as finance chair for Hilary Clinton’s presidential campaign, took out massive loans from all three banks through his Manhattan firm, Nemazee Capital, from all three banks. The documents he showed as collateral were complete fakes, as were the addresses of his two Manhattan offices. When Citibank started asking questions, he drew down his line of credit from HSBC.
Nemazee is a political fundraiser who sits on the boards of many prestigious organizations — such as the Council on Foreign Relations and the RAND Center for Middle East Public Policy. Bill Clinton nominated Nemazee to become U.S. Ambassador to Argentina. Nemazee also donated $50,000 to Barack Obama’s Presidential Inaugural Committee and help solicit funds from other wealthy donors.
In the days before Bernie Madoff, it would have seemed remarkable that he was able to perpetuate this fraud for over a decade. Now it just seems commonplace, at least in the world of multimillion dollar white collar crime.
Now Nemazee has to return all the money (the politicians probably get to keep theirs), and faces more than 30 years in prison.
Nemazee received his B.A. from Harvard in 1972 and has not returned to Iran in decades.