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Four New Jersey men were arrested Tuesday in connection with a massive international bank fraud scheme that cost FleetBoston Financial Corp. and other institutions at least $600 million. U.S. Attorney James B. Comey of the Southern District of New York said Tuesday that a fraud of “astonishing scope and magnitude” was perpetrated out of a small office in Piscataway, N.J., where three principals and the former treasurer of a group of metal trading companies orchestrated their plan to persuade banks to issue large loans based on phantom trades. “This was a very sophisticated operation,” Comey said at an afternoon press conference. “These folks lined up people around the world, places that could only be reached by rickshaw, to pose as metal traders.” Arrested at their New Jersey homes Tuesday were Narenda Kumar Rastogi, 47, Anil Anand, 39, Manoj Nijhawan, 43, and Udhay Shankar, 27, all executives with three companies, Allied Deals Inc., SAI Commodity Inc. and Hampton Lane Inc. The men, who allegedly began obtaining loans from international banks in May 2000, are accused of bank fraud, mail fraud and wire fraud for using invented metals transactions to obtain the loans. They made an initial appearance Tuesday before Southern District Magistrate Judge James C. Francis. Comey said the men represented themselves as brokers for suppliers and purchasers of non-ferrous metals, and were ostensibly in the business of arranging overseas shipments of metal and providing interim financing for metals trades. In addition to FleetBoston, which lost $130 million in the alleged scam, other victims include PNC Bank N.A., China Trust Bank and Dresdner Bank Lateinamerika AG. The complaint also charges that the companies’ chief executive officer, Rastogi, enlisted in the scheme his brother, Virendra Rastogi, who owned and controlled RBG Resources PLC, a London-based metals trading company. Comey said that the genesis of the investigation into what he called a “fast-breaking” fraud came in September, when an employee of J.P. Morgan Chase & Co. became concerned about a $1.2 million loan to a company called Island Metals. The employee went to the company’s listed address in New York only to find a “nondescript door with a peephole,” which Comey said was “not the kind of entrance that Chase executives expected to find.” Other banks victimized by the scam had the same experience when they tried to track down the addresses of the customers of the three companies. Auditors who visited the home offices of purported multimillion-dollar metal trading companies overseas found, in some cases, a single person sitting in a sparsely furnished room, with nothing more than a telephone and none of the computers, faxes or other equipment needed to send the documents supposedly received by the New Jersey businesses. DOUBLE FINANCING According to the complaint, the men presented to banks fabricated bills of lading that showed millions of dollars in inventory. In some cases, the complaint said, the co-conspirators were able to obtain “double financing” from different banks based on the same fictitious bills of lading. Once the bank financing was obtained, the men then arranged for the funds to be transferred to accounts they owned or controlled, including accounts of their three companies and those of RBG Resources. Along the lines of a Ponzi scheme, the men allegedly paid down their obligations on some debts by obtaining loans from other banks. The complaint stated that Allied Deals’ auditor, Ernst & Young, resigned in January due to its “inability to audit certain overseas transactions.” It also states that when London police detectives went to RBG Resources on May 3 to conduct a search, they found Virendra Rastogi shredding documents.

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