Security & Fraud

Kachkar Charged With $140 Million Fraud

Merchants

A 53-year-old businessman has been charged with fraud targeting Puerto Rico’s second-largest commercial bank, Westernbank. The bank subsequently failed, showing losses connected to the fraud of $140 million. Westernbank was taken over by the Federal Deposit Insurance Corporation.

In 2010, Westernbank Puerto Rico, the country’s second-largest commercial bank, took a loss of more than $140 million on loans to a Florida businessman, 53-year-old Jack Kachkar, which contributed to its failure, according to the FDIC’s inspector general.

But the party is over for Kachkar, as Bloomberg reported that the swindler has now been arrested and charged with a $100 million fraud. Kachkar used his pharmaceutical company, Inyx Inc., to borrow tens of millions of dollars in credit from Westernbank Puerto Rico. The money was spent on a private jet and a $6.5 million Miami Beach home.

Kachkar has been charged with eight counts of wire fraud in an indictment unsealed on Friday (Sept. 30), according to a Justice Department statement. The lawyer for Kachkar did not respond to requests for comment, and Kachkar did not answer an email requesting comment.

Kachkar has a colorful history. Born in Syria, he was brought up in Canada by Armenian parents, and he attempted to buy the French soccer team Olympique de Marseille in 2007 for $148 million from Robert Louis-Dreyfus. However, Kachkar failed to come up with the financing, and the deal was nixed.

At that time, Kachkar was investigated by French authorities, and court documents accused him of forging a letter from Countrywide Financial Corp. in his efforts to buy the team. Meanwhile, Westernbank was pursuing a civil racketeering suit seeking payment for the millions it had loaned to Kachkar’s company, Inyx. The amount owed to Westernbank had grown to $100 million in less than two years.

In 2010, Westernbank was subsumed by the Federal Deposit Insurance Corp. The civil suit by the FDIC describes accounting scams by Inyx, such as opening credit lines from Westernbank, false invoicing and instructing customers to deposit payments in secret bank accounts. Westernbank continued to lend to Inyx, believing that financing would come from Goldman Sachs, Credit Suisse Group AG and Moammar Qaddaffi’s son.

Inyx filed for Chapter 11 bankruptcy protection in 2007.

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