NRI couple charged with $40 million bank fraud

NRI couple charged with $40 million bank fraud

Nethinaidu Veluchamy and his wife Parameswari Veluchamy, the principal shareholders of First Mutual Bancorp of Illinois Inc., a holding company for Mutual Bank, allegedly hid cash and assets from creditors intentionally, after defaulting on $40 million in personal and corporate loans, according to an indictment returned in federal court in Chicago on June 22.

As per reports, in June 2009, the couple defaulted on personal and corporate loans totaling $40 million. The following month Mutual Bank was shut down by federal regulators. Prior to the shutdown and continuing until at least November 2015, the couple hid millions of dollars in assets by allegedly falsifying documents, moving money into domestic and foreign bank accounts, and directing employees to destroy financial records. The indictment says the couple also transferred cash to their two adult children, with nearly $8.5 million going to one and more than $10.1 million to the other.

The 12-count indictment was returned last week in U.S. District Court in Chicago.  Each count of bank fraud is punishable by up to 30 years in prison and a $1 million fine. The indictment charges Pethinaidu Veluchamy, 70, with four counts of bank fraud, two counts of destroying records to obstruct a bankruptcy proceeding, two counts of making a false statement under oath in a bankruptcy proceeding, and one count of making a false statement in an application for a U.S. passport.

Parameswari Veluchamy, 65, is charged with four counts of bank fraud, two counts of destroying records to obstruct a bankruptcy proceeding, one count of making a false statement under oath in a bankruptcy proceeding, and one count of making a false statement in an application for a U.S. passport.

According to the charges, Pethinaidu Veluchamy caused his relatives to obtain legal judgments against him for loans for which he knew he was not personally liable so that he could later assert those liens as superior to a bank creditor’s anticipated judgments.

In a 2011 deposition in a separate court case, Pethinaidu Veluchamy fraudulently claimed that certain funds transferred to his adult children represented indemnity obligations for their investments in First Mutual Bancorp. He produced a document to support this claim, but when questioned about the timing of the creation of the document, he claimed the computer he had used to create it crashed in a snowstorm.

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