'Breathtaking Fraud': Indian-Origin CEO At Heart Of $500 BlackRock Scam In US - All You Need To Know

Private-credit investing arm BlackRock and other lenders have claimed to fall victim to what they called a "breathtaking" $500 million fraud by an Indian-origin CEO. According to an exclusive report by the Wall

Street Journal, the lenders, including BlackRock's HPS Investment Partners, are trying to recover hundreds of millions of dollars after accusing Bankim Brahmbhatt, the owner of little-known telecom-services companies Broadband Telecom and Bridgevoice, of allegedly fabricating accounts receivable that were supposed to be used as loan collateral.The lenders filed suit in August and said Brahmbhatt's companies owe them more than $500 million. The report also claimed that French multinational bank BNP Paribas helped finance the loans made by HPS to Brahmbhatt's entities. The French bank, one of Europe's largest lenders, has declined to comment publicly on the case. Meanwhile, Brahmbhatt disputes the allegations of fraud, his lawyer said.

What is the alleged $500 million fraud?

According to the report, BlackRock, the world's largest asset manager, bought credit giant HPS earlier this year as part of an acquisition spree to build out its footprint in private-asset investing. HPS began lending to at least one financing arm affiliated with Brahmbhatt’s telecom companies in September 2020.As it increased the size of its debt investment to around $385 million in early 2021 and then to about $430 million in August 2024, BNP Paribas financed nearly half of the loan to Brahmbhatt’s Carriox and affiliated entities. HPS told clients it held the loans in two credit funds, WSJ reported.HPS then hired Deloitte as it started lending to Carriox to verify its assets by conducting random customer checks, and later appointed CBIZ, an accounting firm, to conduct annual asset checks. In July, an HPS employee noticed irregularities with certain email addresses that purportedly came from Carriox customers. According to the August lawsuit accessed by WSJ, the lenders said that the emails came from fake domains mimicking real telecom companies and that a review of past emails showed the same irregularities. When HPS officials asked Brahmbhatt about the irregularities, he assured them there was nothing to worry about and soon stopped answering their phone calls. A person working with HPS visited the offices of Brahmbhatt's companies in July and found them closed."Two BMWs, a Porsche, a Tesla and an Audi were parked in the driveway. A package next to the front door was collecting dust," WSJ reported. HPS has told some clients it believed Brahmbhatt is in India. His telecom companies filed for bankruptcy in August and were joined in bankruptcy court last week by Carriox Capital II and another financing business, BB Capital SPV.Brahmbhatt filed for bankruptcy himself the same day his telecom companies. Lenders have claimed in their lawsuit that Brahmbhatt transferred assets that should have been pledged as collateral to offshore accounts in India and Mauritius.