A completely unconnected litigation in the United States has thrown up yet another money trail of the fugitive Sandesara family, the promoters of Sterling Biotech and Sterling SEZ, that owes Indian public sector banks (PSBs) vast sums of money.
For those who have not followed this scandalous story, the Sandesaras (Nitin, Chetan and Dipti) are absconding and are believed to be holed up in Nigeria where they have extensive businesses.
They have been accused of money laundering and have lookout notices issued against them by every national investigation agency –Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Serious Frauds Investigation Office (SFIO).
And, yet, Indian PSBs are working with them to settle the massive outstanding dues of their group, of over Rs15,600 crore, at a 55% haircut through an emissary. The Sandesaras are also pushing banks to file litigation to buy time to make the payment.
The US link emerged completely by chance while researching Danny Patel, whose name came up in investigation agencies’ findings with regard to their US operations. This, through some coincidences, led to an interesting litigation in New Jersey where Danny Patel, brother-in-law of Nitin Sandesara, plays an interesting role.
It is something that our investigation agencies ought to be pursuing with speed.
Sandesaras’ US Link
A lawsuit has been filed in New Jersey against two individuals - Anil Patel (of New Jersey) and Manish Patel (of Pennsylvania)–to recover US$13 million that they owe to a creditor named Lakhani Associates. This follows a long litigation that dates back to 2012. The two Patels claimed that they have no money or assets to pay up, following which the New Jersey Court appointed an official receiver to ensure compliance with its order.
In the US, the receiver is a court-appointed officer vested with the power and responsibility to identify and collect assets in a pending suit. The details of the litigation are not important; but it leads a trail to Danny Patel’s door and also to a series of dubious transactions, benami deals and shell companies of the Patels who also may have a significant link to the Sandesaras.
‘Generous’ Danny Patel
In 2018, Anil and Manish Patel, who claimed that they were destitute, hired a new law firm to represent them in the lawsuit—it was the fifth law firm hired by them. This is where the story spices up.
Since the Patels had no money, the receiver inquired about the source of their funds for their lawyer’s fees. Even the court found their claim to have no funds ‘incredible, implausible on its face, and without merit’.
According to the court’s filings, the new law firm, Porzio, Bromberg & Newman, produced a ‘funding agreement’ under which Dakshay ‘Danny’ Patel of Virginia – the same Danny Patel who is Nitin Sandesara’s brother-in-law – agreed to pay up to ‘$400,000’ for Anil and Manish Patel’s legal expenses, as a ‘generous friend’ and ‘out of friendship’.
The receiver’s next set of findings are particularly interesting to those of us following the Sandesara story in India.
•Danny Patel is, apparently, a man of modest means who has no obvious ability to be so ‘generous’ in paying the legal expenses of the other two Patels.
•Danny Patel has close ties to a number of US companies, affiliated with the Sandesara group, most of which are registered at a business address of – hold your breath –4595 Sandesara Drive, Prince George, VA. These include:
•A website shows 34 different companies, many of them Sandesara affiliates, mentioned in the paragraph above (Sterling Gelatin America, SAIB LLC, Sun Management Systems, American Enterprises LLC), operating from that single address at 4595 Sandesara Drive, VA.
All this is excerpted from two New Jersey Court rulings – 29 October 2018 ruling – pp. 18-20; 2 April 2018 ruling - pp. 4-6; 4 September 2018 ruling - p.2. The receiver has found that the funds for Anil and Manish Patel’s expenses come from a bank account belonging not to Danny Patel, but a company called Virginia Star. (4 September 2018 ruling - pp. 7-8).Needless to say, Danny Patel has fought hard to prevent the receiver from ferreting out too much information about his finances, companies and sources of funds.
Indian investigators seem to be aware of some of the Sandesaras’ US businesses. Based on their findings, Firstpost had reported that Nitin and Chetan have floated 37 companies in the USA; some of these may have been used to funnel money to Nigeria. Is Virginia Star linked to the Sandesaras? Shouldn’t Indian agencies attempt to find out?
Here are some of the trails that lead to the Sandesaras.
1. SAIB LLC is shown as the owner of a Gulfstream 200 aircraft (https://prijet.com/owner/SAIB%20LLC) . This is the same aircraft (N162GB) that the Sandesaras owned and flaunted in India, with their name emblazoned on the aircraft that was allegedly seized by the ED and reported by Republic World. As noted above, the receiver has found that Danny Patel is an owner of SAIB. How does an asset belonging to Indian corporate group end up in the hands of a person living in Virginia, USA? Who paid for it?
2.In a hearing in the New Jersey Court, one of the lawyers from Porzio Bromberg, who was paid by Danny Patel, admitted that the payment came from Virginia Star. In one of the hearings, the lawyer stated that Nitin Sandesara has ‘been very generous’ to Anil and Manish and that they were relying on him for funds to satisfy the Lakhanis' judgement. (September 4 ruling - p. 11]. So, it seems that Porzio Bromberg and its clients, Anil and Manish, know Nitin Sandesara’s whereabouts and how to get hold of him.
3.As it turns out, our investigation agencies are aware of Danny Patel’s link to Nitin Sandesara and the fact that many of their assets are owned through him. In November 2018, The Economic Times reported that the Sandesaras owned 2.7 acres of land in Virginia through Danny Patel. This was based on information from our investigation agencies. The modus operandi of the fugitive Sandesaras is very similar to what the US court receiver says about Anil and Manish Patel’s use of shell companies and straw-men to conceal assets from their creditors in the USA. And, now, there seems to be a link between the two through Danny Patel’s payment of legal fees. Is this being investigated?
4.The US court orders detail many of the receiver’s findings concerning Manish Patel’s Indian operations and businesses, especially those that are similar to Sterling Biotech. One of these is Dinesh Remedies Ltd, based in Vadodara, and has connections to US-based Star Capsules and others. He is even supposed to have introduced the main litigant to Nitin and Chetan Sandesara and taken them on a plant visit to Gujarat.
5.The ED has claimed to have attached properties worth over Rs14,000 crore belonging to the promoters of Sandesara group. Indeed, the details of fund diversion from India, to build a huge business in Nigeria, have been detailed by Firstpost already.
Why is there no attempt to stitch together a big picture and ensure that Indian banks get 100% of the money owed by the fugitive Sandesaras and why are they settling for 45%.
Why are the agencies and the government silent while a consortium of banks, led by Andhra Bank and State Bank of India (SBI), negotiates a shady deal with wilful defaulters on their terms?
Remember, every Indian is paying for these bad loans in the form of several lakh crore rupees infused into bank recapitalisation in the past three years. Interestingly, no political party seems to be pushing for repayment and disclosure either.
End Note: The documents mentioned above can be found by clicking and entering requisite details.