Obama, Clinton fundraiser admits $292 million fraud

NEW YORK
Thu Mar 18, 2010 4:50pm EDT

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NEW YORK (Reuters) – A former political fundraiser for leading Democratic Party politicians, including Barack Obama and Hillary Clinton, pleaded guilty on Thursday to defrauding three major banks out of $292.2 million in loan transactions.

U.S.  |  Barack Obama

Hassan Nemazee, 60, once head of a private equity firm and an Iranian American Political Action Committee board member, admitted in Manhattan federal court to defrauding Bank of America Corp of more than $142 million, Citigroup Inc of $74.9 million and HSBC Holdings Plc of $74.9 million to pay his debt to Citigroup.

During the plea proceeding, Nemazee said he tried to get out of financial difficulties starting in the 1990s.

“It was my intention to repay … but the hole that I dug was larger and I borrowed more,” said the gray-haired, dapper Nemazee.

He also told U.S. District Judge Sidney Stein: “I am deeply ashamed of my conduct, for the harm that I inflicted on the banks and most especially my family.”

Nemazee, a U.S. citizen whose family left Iran after the revolution there in 1979, admitted to three charges of bank fraud and one charge of wire fraud.

Nemazee was listed as one of the top “bundlers” of contributions to Obama’s 2008 presidential campaign, according to OpenSecrets.org, a website run by the Center for Responsive Politics.

He typically donated more than $100,000 annually to Democratic Party political candidates, including Obama and now-U.S. Secretary of State Hillary Clinton.

Stein allowed Nemazee to remain free on $25 million bail but under house arrest with electronic monitoring in his Manhattan apartment.

But out of concern that he has property overseas and perhaps tens of millions of dollars to his name, Stein ordered him to surrender on April 30, two months before sentencing on June 30.

Prosecutors said the fraud took place from 1998 until Nemazee’s arrest in August 2009 as he was about to make a trip overseas.

The office of Manhattan U.S. Attorney Preet Bharara and the FBI said Nemazee used proceeds from his scheme to make donations to election campaigns of federal, state and local candidates, political action committees and charities.

They said he also bought property in Italy and paid for maintenance on two properties in New York.

Nemazee obtained hundreds of millions of dollars in loans from the banks and used fake documents to show supposed ownership of collateral, U.S. prosecutors said.

The offenses call for a maximum possible prison term of 30 years but the judge said that under federal guidelines following his guilty plea, Nemazee faces a sentence of between 15 years, eight months and 19 years, seven months.

U.S. prosecutor Daniel Levy told the court that the government had committed considerable resources to tracking down Nemazee’s wealth and believed he was still worth millions.

“There is a big hole of money we have just not been able to find,” Levy said.

The case is USA v Nemazee, U.S. District Court for the Southern District of New York No. 09-902.

(Reporting by Grant McCool; Editing by Andre Grenon and Richard Chang)

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