Nemazee, Political Fundraiser, Charged With $74 Million Fraud

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Nemazee, Political Fundraiser, Charged With $74 Million Fraud

By David Glovin and Kristin Jensen
Aug. 26 (Bloomberg) -- Hassan Nemazee, chairman of Nemazee Capital Corp. and a fundraiser for President Barack Obama and Hillary Clinton, was arrested on a bank fraud charge and ordered to remain under house arrest on $25 million bail.
Nemazee was charged with using phony documents to trick Citigroup Inc. into lending him as much as $74 million. The financier got the loan by telling Citibank he held accounts with hundreds of millions of dollars that could serve as collateral, U.S. Attorney Preet Bharara said yesterday in a statement.
Nemazee, 59, brought to court in Manhattan yesterday, was held overnight and was to be released today with his bond guaranteed by a $20 million Manhattan residence and his $8 million home in Katonah, New York. He will be held under house arrest at his Manhattan apartment, subject to electronic monitoring. U.S. Magistrate Judge Ronald Ellis called the $25 million bond the “most onerous” he had ever seen.
The financier used fake addresses and phone numbers controlled by him to mislead the bank, prosecutors said. The accounts “either never existed or had been closed years before Nemazee submitted the documents referencing those accounts,” Bharara said in the statement.
Nemazee repaid the loan to Citibank yesterday, a day after he was interviewed by Federal Bureau of Investigation agents, prosecutors said. The interview took place at Newark Liberty International Airport as Nemazee was checking in for a flight to Rome.
Hsu Case
Another prominent fundraiser for Democrats, Norman Hsu, was convicted by a federal jury in May of campaign finance fraud for making tens of thousands of dollars in illegal donations. He also pleaded guilty to cheating investors of more than $20 million in a Ponzi scheme. He has yet to be sentenced.
The cases of Nemazee, Hsu and other fundraising scandals point up the problems with a system that requires politicians to raise millions of dollars privately, said Clyde Wilcox, a professor of government at Georgetown University in Washington.
“Both parties have so many people in these categories,” Wilcox said. “This seems less a personal failure of Clinton and Obama than a more structural problem.”
The financier is represented by Marc Mukasey of Bracewell & Giuliani, who declined to comment immediately. The lawyer is the son of Michael Mukasey, U.S. attorney general in the Bush administration. The younger Mukasey also represents Frank DiPascali, an admitted accomplice of swindler Bernard Madoff.
Democratic Fundraiser
Nemazee is one of the leading fundraisers for the Democratic Party. He served as national finance chairman for the Senate committee that works to elect Democrats when it was run by New York Senator Charles Schumer.
In the 2008 presidential campaign, Nemazee raised at least $100,000 for Clinton, and then went on to bring in at least $500,000 for Obama after he defeated her in the primary campaign, according to the Washington watchdog group Public Citizen. Clinton is now secretary of state.
Nemazee also served as New York finance chairman for Massachusetts Senator John Kerry during his 2004 run for the presidency.
Nemazee Capital’s Web site carries excerpts of stories that highlight his connections. The first, a Washington Times piece about former President Bill Clinton’s recent mission to North Korea, describes Nemazee as a “friend and longtime Clinton supporter.”
“We are working with the authorities on this matter,” said Shannon Bell, a Citigroup spokeswoman.
Obama Spokesman
Tommy Vietor, an Obama administration spokesman, and Ian Kelly, a State Department spokesman, declined to comment on the arrest. Brian Fallon, a Schumer spokesman, said $4,800 donated by Nemazee to Schumer in April would be donated to the foreclosure prevention program of the Neighborhood Housing Service. He declined to comment further.
Nemazee Capital, established in 1987, invests in health care, media, oil and natural gas and other industries, according to the firm’s Web site. The firm has more than $3 billion under management, according to a July press release.
Nemazee was born in Washington in 1950 and graduated with honors from Harvard University in 1972, according to his Web site.
The online site lists affiliations with institutions including the RAND Center for Middle East Public Policy, the Asia Society, Harvard’s Center for International Affairs and Nemazee Hospital in Shiraz, Iran, which was built into a modern facility by his father, Mohamed Nemazee, according to the site.
The case is U.S. v. Nemazee, 09-mag-1927, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in New York federal court at [e-mail]; Kristin Jensen in Washington at [e-mail].
Last Updated: August 26, 2009 00:01 EDT