Two Arrests in $19 MM Lease Scam
(Companies listed in the Allserve bankruptcy include: Bank of America, Bank of Lodi, Bank of the West, Central Valley Community Bank, CIT, Citi Capital, Commonwealth Capital, Continental Bank, Excel Bank, Fifth Third Leasing, First Financial, GATX Technology, Irwin Business Finance, Key Equipment Finance, MB Financial Bank North Fork Equipment Leasing, Overland Leasing Group, Pullman Bank & Trust, Republic Bank, Sovereign Bank, CIT Group, US Bancorp Technology Leasing. )
BY KATE COSCARELLI
A pair of Bergen County (New Jersey) men were indicted on charges that they were the architects of a $19 million financial scam that defrauded U.S. lenders, according to a federal indictment unsealed yesterday.
The 16-count indictment charges the Dinesh Dalmia, 45, of Fort Lee, and Ashish Paul, 45, of Norwood, with conspiracy, wire fraud and money laundering between January 2004 and last December. A third man, William Dowling, 42, of Columbus, Ohio, was also charged with conspiring to launder money, officials said.
This is the latest development in a federal investigation that began unfolding in March when fraud charges were filed against Dalmia, who ran a North Brunswick company and several others, and is believed to have engineered the massive scam in which financial companies paid to help equip telemarketing and debt collection call centers.
Dalmia, a fugitive, is in jail in India on unrelated stock fraud charges, authorities said yesterday.
Dowling turned himself into authorities in Ohio. And after a hearing in federal court yesterday in Ohio, he was released on an unse cured bond, said Assistant U.S. At torney Kevin Walsh, who is handling the case in New Jersey. Dowling is expected to be arraigned in New Jersey in the coming weeks.
Paul was arrested at his Nor wood home early yesterday, authorities said. The bespectacled man also was in U.S. District Court in Newark yesterday for a brief hearing.
In court, Walsh argued Paul was a flight risk. He has been in New Jersey for less than a year and has an extensive travel history that included Pakistan, Singapore, Switzerland and the United Arab Emirates, said Walsh.
Magistrate Judge Mark Falk ordered Paul held at a detention facility until further proceedings next week.
The idea behind the scheme was that Dalmia's companies would get lenders would put up the money for the computer equip ment and call lists and the compa nies would make monthly lease payments. But authorities claim the equipment was old and lists did not exist. Dalmia often used the name Nick Mittal when he approached investors.
One of Dalmia's companies was Allserve Systems Corp. in North Brunswick. The company claimed it had a decade of experience equipping and organizing call centers.
As proof for his need for financing, Dalmia presented fake purchase agreements, invoices and delivery receipts, authorities say.
Paul was president of Cincom iOutsource, in Cincinnati, which allegedly created some of those documents. It was also the conduit for the $19 million in wire transfers to pass through on the way to various companies, including some that were just a shell.
The money went into bank ac counts for Dalmia, Paul and their co-conspirators, according to court papers. The indictment details a string of money transfers and bank transactions in the alleged scam.
A few months after lenders gave the money, the monthly lease payments from Dalmia's companies stopped. Allserve has filed for bankruptcy protection.
The lenders included Fifth Third Leasing Company in Ohio, CitiCaptial Technology Finance in Mahwah and G. E. Capital Finance in Connecticut, court papers show.
The indictment also seeks the return of the proceeds from the scam and Paul's $1.9 million house. Paul allegedly made the $600,000 down payment and first three mortgage payments on his Nor wood home with money from the scheme. In addition to spending money on a home, the indictment claims Paul also used to money from the scam pay credit cards, private school tuition payments and country club bills.
Note: The New York Post claims the IT company owed $83 million, most of which was
sent to India. From a previous story:
The alleged Master Mind, Dinesh Dalmia, is reportedly in his homeland of India, being detained, as the Federal prosecutors want him extradited and convicted of all counts, up to 40 years or more. First they have to bring him to the United States.
Reportedly lawyers on both sides have been trying to track down the missing computer equipment and cash. Perhaps sent to India or to an offshore bank account, both US, Great Britain and India law enforcement are seeking answers.
"Dalmia himself has reportedly moved on to the BPO business and is known to be running major call centers at Gurgaon, Bangalore and Chennai!," reports Sucheta Dalal, in “financialexpress.com.”
Allegedly long linked to the Allserve network in the Indian press, Dinesh Dalmia insists he has nothing to do with the now bankrupt company.
"The Chennai correspondent of The Indian Express, Jaya Menon, checked out the addresses listed under the Allserve name," Chennai reported. "As in India , the American creditors allege there is no explanation for $35 million of cash that vanished from the Allserve books between July and October last year.”
US authorities says he fled the United Sates to avoid prosecution, sending cash to foreign banks before he left. Reportedly he had been running his scamming operation from a mansion in Fort Lee, N.J., since late 2003, sending money overseas since he started the scam.
Last January, Dalmia fled again - this time from the U.S. after a series of articles in The New York Post exposed him as the apparent head of a New Jersey-based white-collar crime syndicate.
He was apprehended by Indian authorities after returning to his native country early last month.
According to the New York Post, "The evasive tycoon is now being held under court orders for involuntary "scientific treatment" under a controversial Indian government program that includes 'brain mapping' and chemical injections to force criminal defendants to cooperate during interrogations.
According to press reports in India, the government wants Dalmia to divulge the whereabouts of more than $100 million that he allegedly looted from investors in that country.
Dalmia first came to the attention of federal authorities after a series of exposs in New York Post revealed him to have been living openly in Fort Lee, N.J., since late 2003, despite a worldwide Interpol arrest notice.
The Post coverage identified Dalmia as the alleged mastermind behind the looting of a North Brunswick, N.J., computer-services company called Allserve Systems Corp., which filed for bankruptcy in Newark last November.
The Post drew back the curtain on Dalmia's operations, from secret offshore bank accounts, to his alleged use of forged invoices for bogus companies at fake addresses - all to swindle blue-chip lenders such as IBM Credit Corp. out of millions in equipment finance contracts.
Federal prosecutors and the FBI, which launched a nationwide probe of Dalmia's activities, eventually identified some 20 different multi-million dollar contracts with swindled lenders from San Francisco to Boston.
The government is believed to be preparing criminal charges against additional individuals in the probe as well, it was reported.