HSBC Says it was victim of $75 million Hassan Nemazee fraud

Malta Independent Sunday, 20 September 2009, 00:00 Last update: about 11 years ago

HSBC Holdings said it is a victim of a $75 million fraud by Hassan Nemazee, a top fund-raiser for President Barack Obama and Hillary Clinton, who was arrested last month for defrauding Citigroup Inc.

The US unit of HSBC, the world’s third-largest bank by market value, has filed a $75 million fraud lawsuit against Nemazee in New York State Supreme Court in Manhattan. The 2 September suit came a week after Nemazee was arrested by the Federal Bureau of Investigation for cheating Citigroup out of $74 million.

According to US prosecutors, 59-year-old Nemazee repaid the $74 million he stole from Citigroup by tricking another bank into lending him the money on 24 August. That was a day after Nemazee had been 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 24 August, Nemazee drew down $75 million of his available $100 million 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 Aug. 23, 2009, began to cooperate 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 $74 million.”

HSBC spokeswoman Juanita Gutierrez confirmed in an e-mail yesterday that the bank was suing Nemazee. She declined to comment on whether the bank is the same one as that identified in court papers by prosecutors.

Yusill Scribner, a spokeswoman for US Attorney Preet Bharara in Manhattan, declined to comment.

Nemazee, the chairman of Nemazee Capital Corp., is under house arrest in his $20 million Manhattan apartment on a $25 million bond. He has not entered a formal response to the criminal charges and his lawyer, Paul Shechtman, did not immediately return a call seeking comment yesterday.

The financier was one of the leading fund-raisers for the Democratic Party. In the 2008 presidential campaign, Nemazee raised at least $100,000 for Clinton, according to the Washington watchdog group Public Citizen. And he brought in at least $500,000 for Obama, after he defeated Clinton in the primary campaign, according to Public Citizen. Clinton is now Secretary of State.