Legal News

Our Ponzi Nation: Nemazee, Big Donor to the Dems, Pleads Guilty

By Ashby Jones

Do politicians ever look back on pictures for which they posed with people and think “Ya know, I shoulda figured about this guy. Something didn’t smell right.” Did Florida governor Charlie Crist think that about Scott Rothstein?

And is Bill Clinton now thinking that about Hassan Nemazee, the man with whom he’s pictured above?

The news: Nemazee, a New York businessman and one-time prominent Democratic fundraiser admitted Thursday that he bilked three banks out of $ 292 million in loans. He pleaded guilty to wire fraud and three counts of bank fraud at a hearing before U.S. District Judge Sidney Stein in Manhattan. Click here for Chad Bray’s story on Dow Jones Newswires; here for the NYT story; here, here and here for previous LB posts on Nemazee.

Prosecutors from the U.S. Attorney’s office in Manhattan had alleged that Nemazee obtained hundreds of millions of loans from Bank of America, Citigroup and HSBC Holdings between 1998 and 2009.

Nemazee admitted Thursday that he provided fake documents that claimed he held hundreds of millions of dollars in U.S. Treasury notes and other securities.

“In the 1990s, I was facing severe financial difficulties,” Nemazee said during his plea hearing. “I decided to borrow my way out.”

Under federal sentencing guidelines, Nemazee faces 188 months to 235 months in prison under federal sentencing guidelines. Prosecutors are seeking $292 million in forfeiture in the matter.

Nemazee, who was involved in various presidential campaigns and once served as finance chairman of the Democratic Senatorial Campaign Committee, was initially charged criminally in August 2009 related to a loan he fraudulently obtained from Citibank.

Collectively, the Ponzi schemes that have been exposed in the last 16 months or so all seemed to start the same way: with an alleged intention to repay. But then things unravel, and folks turn to desperate (read: criminal) measures. At least that’s the way the story goes.

“My intention was to repay what I had borrowed,” Nemazee said on Thursday. “As my investments went bad, the hole I dug for myself got larger.”

Full post as published by Law Blog - WSJ.com on March 19, 2010 (boomark / email).