Millions of dollars changed hands as banks fell for Ponzi scheme

Michael J.Garcia, US Attorney for the Southern District of New York, announced that Anil Anand, former CFO of Allied Deals, Inc., was sentenced to time served, 7 months in prison, on charges stemming from his participation in a sprawling, international Ponzi scheme. The scheme resulted in more than $680 million in losses to approximately 20 banks worldwide—among them, J.P. Morgan Chase & Co., Fleet National Bank, PNC Bank, N.A., KBC Bank, N.V., Hypo Vereins Bank, N.A., Dresdner Bank Lateinamerika AG, China Trust Bank, and General Bank. Anand had pleaded guilty in December 2002, pursuant to an agreement to cooperate with the Government, to participating in the Ponzi scheme by, among other things, inducing banks to issue hundreds of millions of dollars in loans. In Manhattan federal court, the judge ordered 46-year-old Anand, a New Jersey resident, to pay forfeiture of $600 million and restitution of more than $683 million.
The scheme involved fake credit reports, a fake credit reporting agency, fake companies who purchased nonexistent metal and fictional businesses that acted as fronts to deal with bankers and auditors. Details of the elaborate scheme read like a sequel to the film Ocean's 11.

Fifteen defendants have been arrested in the United States in connection with this case. Nine—including Anand—pleaded guilty. Five were found guilty at trial and one was acquitted. Two defendants in the US case remain at large.

A complete report on the complicated scheme can be found at the FBI website. My first thoughts were if these people had enough talent, brains and time to come up with all this creative maneuvering of money, why didn’t they just do something legal?

It also occurred to me this scheme would make a great video game—the personalities making up the fake corporate officials, the fake metal companies, the fake credit reporting agency and the lawmen all could be part of actions designed to get you to the next level, in some cases, a federal prison if you lose out to the FBI. I’d include an opt-in top level for defendant cooperation, entitling the player to time served in exchange for helping deconstruct the scheme. My video game would be a renegade version of the traditional board game Monopoly. And we wonder why banks are in trouble?

[Text by Kay B. Day]

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