Indian-Origin CEO Bankim Brahmbhatt Faces $500 Million Fraud Claims

An Indian-origin CEO, Bankim Brahmbhatt, is embroiled in a significant financial scandal involving allegations of a $500 million fraud targeting major lenders, including BlackRock’s private credit investment arm, HPS Investment Partners. The accusations, detailed in a report by the Wall Street Journal, suggest that Brahmbhatt fabricated accounts receivable intended to serve as collateral for loans, leading to one of the largest fraud cases in the financial sector.

According to the lawsuit filed in August 2024, HPS Investment Partners provided loans to Brahmbhatt’s companies, which included Broadband Telecom and Bridgevoice. These loans were contingent upon the companies pledging millions of dollars owed by customers as collateral. The lenders now contend that Brahmbhatt’s firms owe them over $500 million. Upon initiating a verification process, it was reportedly discovered that the loaned funds had been diverted to offshore accounts in India and Mauritius.

HPS Investment Partners, which was acquired by BlackRock earlier this year, began its lending operations to Brahmbhatt’s affiliated companies in September 2020. The financing arrangements were facilitated by BNP Paribas, which provided substantial capital for the loans. Following the lawsuit, several businesses connected to Brahmbhatt, including Carriox Capital, an invoice financing firm based in New York, have sought Chapter 11 bankruptcy protection in the United States.

The lawsuit alleges that over the past two years, Brahmbhatt utilized fake invoices, contracts, and emails to misrepresent the financial status of his businesses. “Brahmbhatt created an elaborate balance sheet of assets that existed only on paper,” stated lawyers representing the lenders.

In early 2021, HPS increased its debt investment in Brahmbhatt’s companies to approximately $385 million, followed by a further increase to around $430 million in August 2024. Reports indicate that nearly half of the financing for these loans was sourced through BNP Paribas.

Suspicion regarding Brahmbhatt’s financial practices arose in July when an HPS employee noticed irregularities related to email communications purportedly from Carriox’s customers. Despite Brahmbhatt’s reassurances during inquiries, he reportedly ceased communication and was unresponsive to calls from HPS officials. A visit to Brahmbhatt’s office in Garden City, New York, revealed that it was closed, and attempts to reach him at his residence were unsuccessful.

On a recent visit, the office suite appeared vacant, with luxury vehicles such as a Porsche, a Tesla, and an Audi seen parked outside. HPS has informed some clients that they believe Brahmbhatt is currently in India.

Brahmbhatt, who has over three decades of experience in the telecommunications industry, is the founder of Bankai Group. His companies provide services and infrastructure to other telecom entities. Notably, his LinkedIn account was inaccessible when checked by reporters, suggesting potential efforts to distance himself from the unfolding situation.

As investigations continue, the implications of this case could have far-reaching effects on the financial landscape and regulatory scrutiny surrounding private credit investments. The ongoing legal proceedings will likely shed more light on the extent of the alleged fraud and its impact on the involved parties.