Massive Loan Fraud : Gujarati Entrepreneur Named In Alleged $500 Million Fraud : US Media Report
New York : A US-based telecom entrepreneur of Indian origin, Bankim Brahmbhatt, has been accused of running a massive loan fraud worth over USD 500 million, according to a report of US media. Gujarati, who owns Broadband Telecom and Bridgevoice, allegedly created fake customer accounts and receivables to obtain large loans from American lenders.
Among those lenders is HPS Investment Partners, an investment firm backed by BlackRock, one of the world’s largest asset managers. Report said that lenders filed a lawsuit in August, claiming Brahmbhatt misled them by pledging non-existent revenue streams as collateral for loans. His firms are now in Chapter 11 bankruptcy, collectively owing more than half a billion dollars.
HPS first lent money to one of his firms in September 2020 and gradually increased its exposure – to USD 385 million in early 2021 and USD 430 million by August 2024. The dispute has highlighted concerns over a fast-growing segment of the private-credit market, where loans are secured against expected revenues or business assets.
Similar cases include those involving auto parts maker First Brands and auto dealer chain Tricolor, both of which went bankrupt after allegedly misusing such financing structures. Brahmbhatt filed for personal bankruptcy on August 12, the same day his companies sought Chapter 11 protection. Under US law, Chapter 11 allows companies to reorganise and continue operations while working out repayment plans with creditors.
When reporters visited his office in Garden City, New York, they found it locked and vacated. Neighbours and nearby tenants said they had not seen anyone at the site for weeks. A visit to a house listed as his residence also went unanswered. People familiar with the investigation told WSJ that HPS fears Brahmbhatt may have left the US for India. However, his lawyer has denied all allegations, insisting the lawsuit’s claims are unfounded.
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