(NYTimes) – A wealthy New York investor and prominent Democratic Party fund-raiser with ties to President Obama and Hillary Rodham Clinton was arrested on Tuesday and accused of lying about his assets to obtain a $74 million loan from Citibank.
The investor, Hassan Nemazee, a former national finance chairman for Mrs. Clinton, orchestrated the fraud by using forged documents showing that he held accounts with collateral worth hundreds of millions of dollars, a federal complaint charged.
But the accounts “either never existed or had previously existed but had been closed years before,” said the office of Preet Bharara, the United States attorney in Manhattan, in a complaint filed in Federal District Court.
Mr. Nemazee also gave Citibank phone numbers and addresses of various financial institutions that would purportedly vouch for his financial strength, but the numbers were controlled by him, the complaint said.
It said that if officials at Citibank tried to confirm the assets’ existence, “they would in fact be contacting a telephone number assigned to Nemazee himself, and not any financial institution.”
Mr. Nemazee, 59, who was charged with one count of bank fraud, did not enter a plea in a court appearance on Tuesday. He is chairman and chief executive of Nemazee Capital, a holding company with investments in private and public companies. But he is better known as a major player in Democratic fund-raising circles since the mid-1990s, when he started raising money for the Democratic National Committee and the Clinton-Gore campaign. He has personally contributed more than $450,000 to various candidates and party committees, dating back to 1990.
Over the years, Mr. Nemazee, an Iranian-American and son of a shipping magnate, has entertained a stream of political luminaries in his Park Avenue home on the Upper East Side.
For the 2006 election, Senator Charles E. Schumer asked Mr. Nemazee to serve as finance chairman for the Democratic Senatorial Campaign Committee. The committee ultimately raised $119 million, significantly outpacing its Republican counterpart and helping Democrats regain control of the Senate.
Mr. Nemazee was one of several national finance chairmen for Mrs. Clinton’s 2008 presidential campaign and was one of her most prodigious fund-raisers. After Senator Barack Obama clinched the Democratic nomination, Mr. Nemazee rededicated himself, hosting a fund-raiser at his home for Mr. Obama with Mrs. Clinton as the featured guest over dinner, for $28,500 per couple.
The Obama campaign eventually credited Mr. Nemazee with raising more than $500,000 on its behalf. Mr. Nemazee also donated $50,000, the maximum allowed, to President Obama’s inauguration committee.
In the late 1990s, President Clinton selected Mr. Nemazee for an ambassadorship to Argentina, but the nomination stalled in the Senate Foreign Relations Committee after an article in Forbes magazine cast a negative light on Mr. Nemazee’s business practices, and Republicans questioned his qualifications. He subsequently said the accusations against him had been baseless.
Spokesmen for Mr. Clinton, Mrs. Clinton and President Obama declined to comment on Mr. Nemazee’s arrest.
Mr. Nemazee paid back the $74 million to Citibank on Monday, a day after the F.B.I. interviewed him at Newark Liberty International Airport, where he was about to check in for a flight to Rome, the federal complaint said.
Prosecutors charged that Mr. Nemazee’s fraud scheme began around December 2006, when he began making agreements with Citibank that allowed him to pledge collateral for the right to borrow millions of dollars. But statements he gave the bank claiming to show that he had the necessary collateral were fakes, the complaint said.
A spokeswoman for Citigroup said on Tuesday, “We are working with the authorities on this matter.”
Mr. Nemazee was ordered jailed overnight by a federal magistrate judge, while arrangements were being made for his release on Wednesday on a $25 million bond. As part of the conditions of his release, Mr. Nemazee will be subject to house arrest and electronic monitoring, the judge, Ronald L. Ellis, said.
Mr. Nemazee’s lawyer, Marc L. Mukasey, who said in court that the bond requirements were “onerous” and “draconian,” would not comment.
A prosecutor, John M. Hillebrecht, opposed his release until Wednesday, when the electronic monitoring was to be started, telling the judge there were reasons “why that would be a huge mistake.” He did not elaborate.