Anil Anand, the chief financial officer of three metals companies, was the mastermind of what prosecutors call a scam of “astonishing scope,” according to a Bloomberg report, citing U.S. authorities.
The complex scheme allegedly bilked banks out of at least $600 million, according to reports.
Anand and three others—Narendra Kumar Rastogi, Manoj Nijhawan, and Udhay Shanker—were arrested last Tuesday by FBI agents and accused of running a two-year metals-trading scam designed to defraud banks. The four men were executives of three trading companies based in Piscataway, New Jersey: Allied Deals Inc., Hampton Lane Inc., and SAI Commodity Inc.
Anand, 41, was allegedly the executive communicating with banks when they extended credit lines to the three companies. He also dealt with those financial institutions when they sent investigators to check out the books of the three trading companies. The banks include J.P. Morgan Chase & Co., FleetBoston Financial Corp., and PNC Financial Services Group, according to published accounts.
The CFO also allegedly led a cover-up plan, reportedly supervising the creation of false documents, moving money from one account to another to mask shortfalls, and arranging for fresh bank loans to pay off older ones that came due. “He was deeply involved,” assistant U.S. attorney Marcus Asner reportedly told U.S. magistrate judge James Francis at a bail hearing. “His fingerprints are all over this.”
Anand faces up to 30 years in prison if convicted of conspiracy to commit bank fraud.
According to Bloomberg, Anand and his family recently moved from their home, which they bought in March 2001 for $896,595. According to Anand’s lawyer, the CFO is the only American citizen of the four men arrested by the FBI.
Reportedly, Anand concocted a shell game last September when the three companies began having trouble paying bank loans.
In September, he also began lying to the banks when the trading companies began missing payments, according to Bloomberg, citing Asner as its source.
When the banks sent forensic accountant Bernard Katz to Piscataway to scrutinize the three trading companies’ books, Anand desperately tried to prevent him from reviewing documents and meeting with customers, Bloomberg reports. Allegedly, Anand gave little information about $181 million in accounts receivable.
Anand also apparently conceded to Katz that transactions that appeared to be irregular were indeed “unusual,” but assured him there were no others like them. Katz later found six other similarly questionable transactions.
“The company’s chief financial officer appears to have little knowledge of the sales process and related documentation,” Katz reportedly said in an affidavit filed in bankruptcy court in New York.
Longtime Adelphia Finance Exec Quits
Over the weekend, James R. Brown resigned as vice president of finance at Adelphia Communications Corp. Brown worked for the besieged company for nearly 18 years.
Brown’s resignation comes less than a week after Adelphia’s founder and chief executive John Rigas resigned. As CFO.com reported, CFO Timothy Rigas—the CEO’s son—resigned last Thursday.
That’s the same day the sixth-largest cable company announced it was being investigated by grand juries in two states. Also on Thursday: Adelphia reported it missed $44.7 million in debt and dividend payments.
The company is also being investigated by the Securities and Exchange Commission over loans the company guaranteed to partnerships controlled by the Rigas family.
Meanwhile, The New York Times reported Sunday that Adelphia was financially involved in the Rigas family’s purchase of the Buffalo Sabres hockey team. Adelphia’s investment in the team was never fully disclosed, according to the report.
Network Associates to Restate Results
Management at Network Associates Inc. said Friday it will restate results for 1998 through 2000 due to inaccurate accounting entries by a single employee.
In 1998, inaccurate accounting entries reclassified amounts from the tax liability accounts to the general and administrative liability accounts, the company reported. These actions understated operating costs and expenses by $6.2 million.
In 1999, inaccurate accounting entries led to an overstatement of revenue by $28.2 million and an understatement of operating costs and expenses by $1.5 million.
In 2000, inaccurate accounting entries inflated revenue by $15.3 million and deflated operating costs and expenses by $2.9 million.
The company’s general counsel, Kent Roberts, told Reuters the errors “looked intentional” and that the person believed to be responsible was no longer with the company.
Goldman Out of Accenture Deal
So, why did Accenture late Thursday boot Goldman Sachs from the underwriting syndicate for the consultancy’s secondary stock offering?
The reason: the investment-banking giant said last year it needed more time to sell the shares, according to Bloomberg.
It appears that bankers at Morgan Stanley Dean Witter & Co. told Accenture the underwriting could be completed on schedule, however. As a result, the investment bank raked in $30 million in fees, according to the account.
Accenture sold 93.5 million shares at $20 a pop, raising $1.87 billion. Goldman reportedly wanted to sell the shares at between $19 and $19.50.
The new shares, which started trading on Friday, closed unchanged. Investors told the wire service, however, that Morgan was buying the Accenture shares to prop them up.
In other financing news: Donald Trump’s Trump Hotels & Casino Resorts Inc. canceled its planned issue of $470 million of mortgage notes. The reason? Reportedly, bondholders demanded higher interest rates.
The financially troubled company last week had offered a rate of 13 percent on the notes, but potential lenders still weren’t happy, Trump reportedly said.
Meanwhile, HealthSouth Corp., operator of rehabilitation, outpatient surgery, and diagnostic imaging centers, issued $1 billion of 10-year senior notes in the private placement market. The $1 billion was double the amount the company had originally planned to borrow. The debt offering was managed by UBS Warburg, Banc of America Securities, and Deutsche Bank Securities Inc. The notes were priced to yield 7.726 percent. That’s 248 basis points over comparable Treasuries. The HealthSouth paper was rated Ba1 by Moody’s and BBB- by Standard & Poor’s.
This Week’s IPOs
Is tech staging a comeback in the initial public offering market?
Maybe so. There are currently 11 technology deals in the IPO pipeline, according to reports citing Dealogic LLC. That’s more than any other sector except health care.
In fact, five tech companies are scheduled to price this week alone.
The reason for the resurgence: the tech-heavy Nasdaq climbed 9 percent last week, its biggest weekly gain in more than a year, while the Philadelphia Stock Exchange semiconductor index jumped 13 percent.
Among the companies planning to price this week:
- Computer Programs and Systems Inc. The health-care information technology company is looking to raise $51 million in its IPO.
- Liquidmetal Technologies. A developer of products made from amorphous alloys, the company expects to raise between $75 million and $85 million.
- Altiris Inc., an information technology software and services specialist. The company’s IPO should bring in between $50 million and $60 million.
- Netflix Inc. The company, which provides online subscription services for movies, television, and other filmed entertainment through Netflix.com, hopes to raise more than $71 million.
- SRA International. The software vendor expects to raise more than $70 million with its IPO. Given the Bush Administration’s ongoing war against terrorism, the SRA offering should attract plenty of investor interest. The company provides information technology services to U.S. government organizations in three principal markets, including national security.
One health-care company, Eon Labs Inc., is also scheduled to go public this week. Management at the generic drugmaker hopes to raise more than $137 million with its IPO.