PE Pro Faces New Fundraising Fraud Allegations

NEW YORK (Reuters) – A fund-raiser for Barack Obama, Hillary Clinton and other Democrats who was charged last week with defrauding Citigroup Inc (C.N) also defrauded other banks, U.S. prosecutors said.

The allegations against fund-raiser Hassan Nemazee — arrested last week on a bank fraud charge and released on $25 million bail — were not formal charges but were in a letter dated Tuesday from prosecutors to a Manhattan federal court magistrate judge handling the case.

Nemazee, 59, head of a private equity firm, was accused on Aug. 25 of one count of bank fraud for seeking a fraudulent $74 million loan from Citigroup’s banking unit. He said after his arrest that he had repaid the loan.

“Nemazee repaid his fraudulent loan from Citibank with approximately $74 million that he obtained by defrauding yet another bank,” the letter by U.S. Attorney Preet Bharara said. “Furthermore, the Government learned last week that the defendant had defrauded yet another financial institution (Bank No. 3) by obtaining multiple lines of credit on the basis of similar false and fraudulent information.”

The letter did not identify the second and third banks and said Nemazee’s total outstanding loans to the third bank exceed $100 million.

Nemazee’s lawyer could not immediately be reached for comment.

Nemazee is listed as having been among the top “bundlers” of contributions to Obama’s presidential campaign, according to OpenSecrets.org, a website maintained by a nonpartisan research group, the Center for Responsive Politics.

He was a national finance chairman of Hillary Clinton’s 2008 presidential campaign, and a supporter of Sen. John Kerry’s run for the White House in 2004.

The prosecutor’s letter was in response to a written request from Nemazee’s lawyer Marc Mukasey for a hearing to address a freezing of funds of Nemazee and his family held in Bank of America Corp (BAC.N) and in other accounts.

“With his accounts secretly and summarily frozen, and no access to his office, he is unable to retrieve personal information such as phone numbers, account numbers and addresses,” Mukasey’s letter said. It said these were critical to meet the needs of of his family and to hire defense counsel and Nemazee’s constitutional rights were in danger of being violated.

Nemazee typically donates more than $100,000 annually to Democratic political candidates, including Senate Majority Leader Harry Reid and Sen. Charles Schumer, and sits on the board of the Iranian American Political Action Committee.

Nemazee faces up to 30 years in prison and a fine that could reach $1 million or more on the one charge.

U.S. v. Nemazee, 09-mj-1927 in U.S. District Court for the Southern District of New York (Manhattan).

(Reporting by Grant McCool, editing by Gerald E. McCormick)