N.Y. Seizing BCCI Hotels
The New York State Banking Department has moved to foreclose on four hotel properties as part of its liquidation of the seized Bank of Credit and Commerce International.
The department, as liquidator, filed suit last week in federal court in New York to recover the properties under the Racketeer Influenced and Corrupt Organization Act.
The suit contends that Zurich Corp., P.S. Investment Co., and the two companies' owners, Ponnapula Sanjeeva Prasad and his wife, Indrani Prasad, devised and executed a scheme to improperly induce $34 million in loans from the bank.
The RICO complaint asserts that the loans to Zurich Corp. and P.S. Investment, the largest single block of loans by the Bank's New York agency, were in many instances obtained "for purposes other than those stated in the loan application."
Both companies have headquarters in Greenville, N.C., which was also given as the Prasads' last known address.
The Prasads are U.S. citizens who were born in India.
Siphoning of Revenues
The suit further alleges that that the defendants "siphoned off revenues generated by the properties [that were] purchased and refurbished with the proceeds of the agency loans and have repaid none of the $34 million."
The four hotels named in the suit are: Quality Hotel at New York's LaGuardia Airport; the former Macon Hilton, in Macon, Ga.; a Days Inn in Tarpon Springs, Fla.; and a Ramada Inn in Chattanooga, Tenn.
The suit marks the first step by the department to recover assets of Bank of Credit and Commerce, which was seized by regulators worldwide July 5 after massive fraud was discovered.
The New York State Banking Department, as liquidator of the New York agency, will begin processing and validating claims against the bank starting Dec. 9.
The bank's New York agency holds $115 million in assets on its books, net of loan loss reserves.
A Matter of Years
A spokeswoman for the department said that it would likely take several years to complete the liquidation.
The Department already has some $24 million in cash assets belonging to the bank, including $17 million in cash that were posted to to a special account by Bank of Credit and Commerce in March following a joint Federal and state order mandating the closing of BCCI operations in the United States.
"We will foreclose on additional properties if necessary in order to protect creditors of the bank's New York agency," the spokeswoman said.