Hong Kong Court Wants to Know, How & Why SSG Capital, Value Team Corp Received About $ 23.3 million from Prithvi Infosolutions
A court in Hong Kong has ordered Shyam Maheshwari, Andreas Vourloumis, and Edwin Wong, principals of the hedge fund SSG Capital, a Hong Kong-based asset management firm, to answer under oath questions about missing funds relating to a multi-million dollar fraud scheme involving Prithvi Information Solutions Ltd and its units.
The Hong Kong court wants to know how and why SSG Capital and Value Team Corp owe Prithvi Solutions Inc (PSI), a sum of US$ 4,000,000 and US$ 18,900,000, respectively? The court had asked Shyam Maheshwari, Andreas Vourloumis, and Edwin Wong, principals of the hedge fund SSG Capital, to answer under oath questions on missing funds.
The court also wants to know whether funds owing to PSI were a result of receiving funds from another person or entity, whether such funds received were transferred by Value Team Corp or SSG Capital to another person or entity and why Value Team Corp or SSG Capital has not paid to Prithvi Solutions or Kyko Global Inc, the report says.
The case related to a suit filed by Kyko Global seeking to recover damages of over $18 million from Prithvi Info Solutions, which was once a high-flying part of India's software story and had been purchased by many top foreign funds.
As reported by Moneylife in November 2011, Prithvi Info Solutions entered into an agreement with Kyko Global Inc, a Canadian company, for certain factoring (a type of commercial lending) services.
Prithvi was to sell to Kyko some of its customer account receivables for IT services and authorise direct payment on those customer accounts receivable to be made to Kyko.
A factoring relationship started, whereby when the customers would confirm invoices from Prithvi, the Canadian company would advance funds to Prithvi for each invoice, and the customer would pay Kyko directly when the invoice was due.
In February 2013, the payments to Kyko suddenly stopped, with more than $ 17 million owing. Kyko then investigated and found that Prithvi's relationship with these five customers was fictitious.
When Kyko tried to contact the alleged customer companies directly for payments, it discovered that some of them were associates of Prithvi, who had posed as clients and created and executed the verifications. In order to get the money back, Kyko filed a lawsuit on 16 June 2013 against Prithvi Information Solutions at the US District Court in Seattle.
In September 2013, Kyko filed a Writ of Garnishment against Prithvi Information Solutions. Kyko claimed damages of $18,431,765.90 ($18.43 million) inclusive of balance of judgement, prejudgement interest and interest of judgement from 9 June 2013 to 23 September 2013.
Prithvi Infosolutions and Madhavi Vuppalapati, its chairwoman, have been found liable by the federal court in Washington for creating fake companies and bank accounts to fraudulently acquire and move millions of dollars.
In 2013, the Washington federal court ordered Prithvi Infosolutions and various other entities and individuals to pay $134 million (about Rs950 crore) in damages in relation to fraud and Racketeer Influenced and Corrupt Organization Act (RICO) charges.
A three-year investigation conducted by the US Federabl bureau of Investigation (FBI) and Internal Revenue Service (IRS) resulted in Satish Vuppalapati, the managing director (MD) of Prithvi, and Madhavi Vuppalapati being indicted on criminal charges of, among others, wire fraud and money laundering conspiracy in December 2017. The duo has reportedly fled the US to evade prosecution and are believed to be hiding in Hyderabad in India.
Kyko Golobal approached the Hong Kong court to follow money trail of Prithvi Solutions. Following the court directions, Hang Seng Bank, a wholly owned subsidiary of HSBC Bank, submitted the records which shows foreign currency convertible bonds (FCCB) worth $35 million held in escrow at UCO Bank branch in Hong Kong transferred and dispersed into numerous entities and offshore companies.
Kyko discovered that Prithvi transferred about $24 million to SSG Capital in Cayman Islands and Value Team Corporation (VTC), a British Virgin Islands entity controlled by SSG Capital's principals. Pursuant to Kyko's request, the federal court in Washington requested the Hong Kong court's assistance to compel Maheshwari, Andreas, and Wong to answer questions regarding the $24 million. The Hong Kong court granted Kyko's request.
Acording to Kiran Kulkarni, chief executive of Kyko Global there are numerous other entities and individuals that allege to be harmed by the activities of Prithvi and its directors. "These include Sojitz, a Japanese finance company, Deutsche Bank of India and HSBC Bank of India. A California resident also came forward in 2014 alleging the Vuppalapatis stole his identity in relation to fraud and racketeering activities. The complaint was filed with numerous regulatory bodies including the SEBI, ED, SFIO and others, but it appears that the Indian authorities have not taken any action as of yet."
"In high fraud profile cases such as those of Mehul Choski, Vijay Mallya, and Nirav Modi, the Indian government made extradition requests and pleas for help from various foreign governments in bringing these alleged fraudsters to justice. We are disappointed that reciprocal treatment by the Indian government is not being shown to bring the Indian nationals who have committed fraud in the US to justice," he added.
Earlier in April 2014, following directions from a US District Court to recover money, the Sheriff from King County had auctioned personal assets of Madhavi Vuppalapati, founder of Prithvi Info, to recover $17 million.
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