Rastogi Sentence

United States Attorney

Southern District of New York

FOR IMMEDIATE RELEASE

MARCH 6, 2008

CONTACT: U.S. ATTORNEY’S OFFICE

YUSILL SCRIBNER

REBEKAH CARMICHAEL

PUBLIC INFORMATION OFFICE

(212) 637-2600

CEO OF INTERNATIONAL METAL TRADING COMPANY

SENTENCED TO PRISON FOR $683 MILLION FRAUD SCHEME

MICHAEL J. GARCIA, United States Attorney for the

Southern District of New York, announced that NARENDRA KUMAR

RASTOGI was sentenced today to 84 months in prison on charges

arising out of his leadership role in a sprawling, international

Ponzi scheme. The scheme resulted in over $680 million in losses

to approximately 20 banks worldwide (including J.P. Morgan Chase

& Co., Fleet National Bank, PNC Bank, N.A., KBC Bank, N.V., Hypo

Vereins Bank, N.A., Dresdner Bank Lateinamerika AG, China Trust

Bank, and General Bank). NARENDRA RASTOGI, who pleaded guilty

pursuant to a cooperation agreement, recently testified as a

prosecution witness in the United Kingdom trial, which began in

September 2007, and is ongoing. The sentence was imposed by

United States District Judge RICHARD M. BERMAN in Manhattan

federal court. According to documents filed and the evidence at

trial in this and related cases in the Southern District of New

York and the United Kingdom:

NARENDRA RASTOGI and his brother, VIRENDRA RASTOGI --

charged by the United Kingdom’s Serious Fraud Office(“SFO”) with

three other individuals allegedly involved in the Allied Deals

scheme in a related case -- were leaders in a far-reaching scheme

to defraud over 20 major U.S. and foreign banks by inducing them

to issue hundreds of millions of dollars in loans. Allied Deals,

Inc., Hampton Lane, Inc., and SAI Commodity in the United States

and RBG Resources in the United Kingdom (collectively, the

"Allied Deals companies") purported to be in the business of

brokering trades in non-ferrous metals. The Allied Deals

companies were controlled by NARENDRA RASTOGI in the United

States and VIRENDRA RASTOGI in the United Kingdom.

As part of their business, the Allied Deals companies

purportedly would arrange for sales between buyers and sellers of

metal in legitimate, "arms-length" transactions (transactions

negotiated by unrelated parties, each acting in his/her own best

interest). Purportedly to finance those metal sales, the

defendants then would arrange for loans with banks, usually to be

repaid after 180 days. As collateral for the loans, the banks

relied on Allied Deals' accounts receivables (the money that

Allied Deals was due from the customers for the metal

transactions), expecting that the supposed loans would get repaid

when the customers repaid Allied Deals for the metal that had

been purchased.

In fact, hundreds, if not thousands, of metal

transactions upon which the loans were based simply did not

exist. NARENDRA RASTOGI and his co-conspirators had set up and

controlled an elaborate network of hundreds of sham, nominee

companies around the world (which they called "group companies")

to serve as fake purchasers of metal from Allied Deals, so that

the defendants could get loans from the victim banks.

RASTOGI and his co-conspirators used loan proceeds from

one victim bank to make the loan payments required by another

victim bank, while concealing that the newly-issued loans were

not being used to fund actual, arms-length metal transactions and

that the money used to pay off the loans had not been provided by

the buyers of metal in bank-financed sales.

As part of the scheme, RASTOGI and his co-conspirators

went to extraordinary lengths to create a facade that sham,

controlled “customers” were in fact real, independent metals

companies with actual employees and offices and with no ownership

or control relationships with the defendants. Among other

things, a number of co-conspirators posed as Allied Deals

customers, established offices and phone lines for the sham

companies in the US and abroad, arranged for fake letterhead and

bank accounts, and were prepared to field calls from bankers or

auditors.

RASTOGI and his co-conspirators also created fake

credit histories for the sham customers. Among other things,

they established a fake credit reporting agency, which then would

generate false credit reports attesting to the credit-worthiness

of the sham companies. These credit reports then were kept in a

series of "credit files" that Allied Deals maintained for each of

its sham customers, which files could be shown to banks and/or

auditors to further the deception that they were real customers.

Allied Deals employees also furthered the scheme by

forging many of the documents that the banks required in order to

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obtain loans. For example, the documentation department of

Allied Deals would create fake purchase contracts at Allied

Deals' office in New Jersey, cut and paste a signature for the

purported customer, and then fax the document between fax

machines at Allied Deals, in order to make it appear that the

document had come from overseas. The evidence also established

that Allied Deals employees routinely forged such key shipping

documents as steamship line bills of lading, and Chamber of

Commerce certificates of origin.

RASTOGI and his co-conspirators also would ship the

same metal between multiple customers at different ports around

the world, using each repeated metal transaction to support an

additional loan. To increase the declared value of the metal

being shipped (and the amount of each loan), Allied Deals

employees also would falsely represent on the bill of lading the

type of metal in a particular container – stating, for example,

that a particular container contained an expensive metal, such as

cobalt, when it in fact contained a cheaper metal, such as lead.

The defendant and his co-conspirators also would use the same

collateral for two different loans by submitting purportedly

"original" bills of lading to more than one bank.

In the spring of 2002, several of the defendants in the

United States were assigned the task of fielding telephone calls

from auditors or bankers, while posing as a representative of one

or more of the sham companies in the United States. To

facilitate this effort, the co-conspirators obtained a number of

cellular telephones, each of which was assigned to a particular

sham company. A number of Allied Deals employees then fielded

calls from bankers, falsely assuring them that the amounts due

would be repaid.

A total of fifteen defendants have been arrested in the

United States in connection with the scheme. Nine, including

NARENDA RASTOGI, pleaded guilty in advance of trial. Six

defendants in the U.S. case went to trial, five of whom were

convicted. Two defendants in the U.S. case remain at large.

RASTOGI pleaded guilty in December 2003, pursuant to a

cooperation agreement with the Government, to one count of

conspiracy, 28 counts of bank fraud, and one count of conspiracy

to commit money laundering. As part of his cooperation, RASTOGI

testified in London in the fall of 2007 over the course of six

and one half days at the UK trial of his brother VIRENDRA RASTOGI

and three others.

In addition to the prison term, NARENDA RASTOGI was

sentenced to 5 years of supervised release and ordered to pay

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restitution of $683,632,800. RASTOGI, age 53, of Gutenberg, New

Jersey, has been detained since his arrest in May 2002.

Mr. GARCIA stated: "The Rastogi case involves a

massive and sophisticated scheme to steal hundreds of millions of

dollars from a number of international banks. The fraud – which

was carried out through a sprawling network of hundreds of sham

metal customers, outright falsification of documents, and complex

efforts to conceal and further the fraud – was astonishing in

scope and magnitude. The success of this investigation and

prosecution is a testament to the years of close cooperation

between this Office, the FBI, and the United Kingdom's Serious

Fraud Office."

Mr. GARCIA thanked the Federal Bureau of Investigation

and the United Kingdom's Serious Fraud Office for their work in

this investigation and prosecution.

This prosecution is being handled by the Major Crimes

Unit of the United States Attorney's Office. Assistant United

States Attorney MARCUS A. ASNER is in charge of the prosecution.

08-059 ###

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