stickyimage

Fraud Friday – Feds Claim $179 Million USDA B&I Loan Fraud, Arrest First Farmer Financial’s Nik Patel

Tags: , ,

October 3, 2014

By Bob Coleman
Editor, Coleman Report

arrestwarrantBusiness Loan Express’ Patrick Harrington’s $30 million loan fraud conviction was based on creating a lot of fake paperwork and recruiting straw buyers to get an SBA loan approval number, and then selling the note to the secondary market.

That seemed like a lot of work for Orlando-based nonbank lender First Farmer’s, 30 year-old, Nikesh Patel.

Why go to all that trouble to create fraudulent loan files when you only have to fill out a few pieces of paper to sell directly to the secondary market?

Complete five simple fill-in-the-blank forms, 16 pages total, and you get $7 million wired to your account the next day! Do it twice a month for a year, and collect $179 million. Tax free!

So alleges the feds as Nik was arrested Tuesday for the fraud, a day after Pennant Management filed suit against him and his wife and a number of Nik’s shell companies.

We’ll cover this more in depth, but here are some juicy bullet points:

• Pennant Management bought 26 loans totaling $179 million since June 2013
• A USDA official confirmed 25 loans are not in their computer system – (therefore presumed fraudulent I add)
• Says Pennant’s lawsuit, “Trisha is an individual and citizen of the State of Florida. Trisha is the wife of Nikesh, and conspired with him and FFF to accomplish the fraud alleged herein. Trisha was previously employed by Quadrant Financial, Inc., and her duties included working with the USDA-guaranteed Rural Development loan program. In the course of that employment, she had the opportunity to gain a detailed understanding of the how the program worked and where its vulnerabilities might lie.”
• The Patels bought themselves a “lavish” personal residence
• Nik is, well I guess was, negotiating to develop fifty Bennigan’s franchised restaurants in India

Ironically, I was giving a speech for the Boefly franchisor event and talked about loan fraud the day of Nik’s arrest.

One of the five warning signs I stated was overly complex transactions. Pennant’s lawsuit claims there are a number of undercapitalized entities all owned by Nik. Check out all these entities named in the lawsuit:

FIRST FARMERS FINANCIAL, LLC
ALENA HOSPITALITY, LLC
ALENA LABORATORIES, LLC,
ALENA AVIATION, LLC,
ABLE CONNECTION, LLC,
NPSSS,LLC,
KUBER CAPITAL FUNDING, LLC,
KUBER CONSULTING
SURI HOSPITALITY, LLC,
SURI HOSPITALITY INTERNATIONAL, LLC

I’ll follow up with more later…

Read Bloomberg Coverage

Read Arrest Warrant for Nikesh A. Patel

Read Pennant Management, Inc. Complaint v. Patel

Read Pennant Lawsuit Exhibits

2 years ago by in . You can follow any responses to this entry through the | RSS feed. You can leave a response, or trackback from your own site.