DOJ: South Florida Resident Sentenced to 30 Years for $100 Million International Fraud Scheme that Led to the Collapse of One of Puerto Rico’s Largest Banks

I wonder how many trafficking tiny humans trust funds were found.

https://westernbank.com/

A Key Biscayne, Florida, resident and the former CEO and Chairman of a now-bankrupt multinational pharmaceutical company was sentenced to 30 years in prison followed by five years of supervised release yesterday for his role his role in a $100 million scheme to defraud Westernbank of Puerto Rico (Westernbank). The losses triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Special Agent in Charge Michael J. DePalma of IRS Criminal Investigation (IRS-CI) for Miami and Puerto Rico, Special Agent in Charge Iván J. Arvelo of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in San Juan and Special Agent in Charge Douglas A. Leff of the FBI’s San Juan, Puerto Rico Field Office made the announcement.

Jack Kachkar, 56, was sentenced by U.S. District Judge Donald L. Graham of the Southern District of Florida, who also presided over the trial in this case.  Judge Graham also ordered the defendant to pay $103,490,005 in restitution to the FDIC, as receiver for Westernbank.  Kachkar was convicted on Feb. 4, 2019, after a three-week trial, of eight counts of wire fraud affecting a financial institution. 

According to evidence presented at trial, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., a publicly traded multinational pharmaceutical manufacturing company.  Beginning in early 2005, Kachkar caused Westernbank to enter into a series of loan agreements in exchange for a security interest in the assets of Inyx and its subsidiaries.  Under the loan agreements, Westernbank agreed to advance money based on Inyx’s customer invoices from “actual and bona fide” sales to Inyx customers, the evidence showed.

The trial evidence showed that Kachkar orchestrated a scheme to defraud Westernbank by causing numerous Inyx employees to make tens of millions of dollars worth of fake customer invoices purportedly payable by customers in the United Kingdom, Sweden and elsewhere.  Kachkar caused these invoices to be presented to Westernbank as valid invoices.  Kachkar made false and fraudulent representations to Westernbank executives about purported and imminent repayments from lenders in the United Kingdom, Norway, Libya and elsewhere in order to lull Westernbank into continuing to lend money to Inyx, the evidence showed.  In fact, these lenders had not agreed to repay Westernbank’s loan.  Kachkar made false and fraudulent representations to Westernbank executives that he had additional collateral, including purported mines in Mexico and Canada worth hundreds of millions of dollars, to induce Westernbank to lend additional funds, the evidence showed.  In fact, this additional collateral was worth barely a fraction of that represented by Kachkar.

During the course of the scheme, Kachkar caused Westernbank to lend approximately $142 million, primarily based on false and fraudulent customer invoices.  The evidence showed that the defendant diverted tens of millions of dollars for his own personal benefit, including for the purchase of, among other things, a private jet, luxury homes in Key Biscayne and Brickell, Miami, luxury cars, luxury hotel stays, and extravagant jewelry and clothing expenditures.

In or around June 2007, Westernbank declared the loan in default and ultimately suffered losses exceeding $100 million on the Inyx loans.  According to trial evidence, these losses later triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.  At the time of its collapse, Westernbank had approximately 1,500 employees and was one of the largest banks in Puerto Rico.

This case was investigated by the FDIC-OIG, IRS-CI, HSI and FBI.  The Department of Justice’s Office of International Affairs provided significant support in the investigation.  The case is being prosecuted by Assistant U.S. Attorney Michael N. Berger of the Southern District of Florida and Trial Attorney Michael O’Neill of the Criminal Division’s Fraud Section.  The Department acknowledges and appreciates the substantial assistance of the Royal Canadian Mounted Police and the U.K. Metropolitan Police.

Inyx, Inc. Chairman & CEO Approved as Debtor-In-Possession Lender for Inyx Subsidiaries
Published: Jul 12, 2007

NEW YORK, July 12 /PRNewswire-FirstCall/ -- Inyx, Inc. , reported that the company's Chairman & CEO, Jack Kachkar, M.D., yesterday was approved as the debtor-in-possession lender for Inyx USA, Ltd. and Exaeris, Inc., its two wholly-owned North American operating subsidiaries, by the U.S. Bankruptcy Court in the District of Delaware, over the objections of Westernbank Puerto Rico, a wholly owned subsidiary of W Holding Company, Inc. .

On July 2, 2007, as a measure to protect Inyx against further potential damaging actions by Westernbank, the company placed its two U.S. operating subsidiaries in Chapter 11 protection.

As a result of yesterday's court approval of Dr. Kachkar providing the financing for the U.S. operating subsidiaries, Inyx's North American businesses will continue to operate on a normal basis.

Dr. Kachkar also continues to provide the financing for the operations of Inyx, Inc., which is not itself a party to the Chapter 11 filings.

In addition to the Chapter 11 protection, on June 29, 2007, Inyx, Inc. and Inyx USA, together with Dr. Kachkar and his wife, filed suit against Westernbank in New York State Supreme Court, asserting various causes of action seeking no less that $500 million in compensatory damages as well as punitive damages. The complaint charges, among other things, that Westernbank acted in bad faith and in a commercially unreasonable manner by blocking the flow of funds from Inyx's customers to the company, and preventing the Inyx companies from paying their debts. The complaint asserts causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, promissory estoppel, wrongful dishonor of checks, wrongful impairment of collateral, tortious interference or impairment with prospective business relations, and third-party beneficiary of contract and tortious interference with contracts and prospective business relations.

About Inyx

Inyx, Inc. is a specialty pharmaceutical company with niche drug-delivery technologies and products for the treatment of respiratory, allergy, dermatological, topical and cardiovascular conditions. Inyx USA, Ltd., located in Manati, Puerto Rico, is the company's North American-based production center. Exaeris, Inc., based in Exton, Pennsylvania, is Inyx's North American marketing arm. For more information, please visit: www.inyxgroup.com.

Safe Harbor

Statements about the Inyx's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. Inyx intends that such forward-looking statements be subject to the safe harbors created thereby. Since these

statements involve risks and uncertainties and are subject to change at any time, Inyx's actual results could differ materially from expected results.

For more information, please contact: Jay M. Green, Executive VP jgreen@inyxgroup.com

Inyx, Inc.
CONTACT: Jay M. Green, Executive VP of Inyx, Inc., jgreen@inyxgroup.com

Web site: http://www.inyxgroup.com/ Voting is beautiful, be beautiful ~ vote.©