An Indian-origin CEO is at the heart of a $500 million scam that targeted the world’s biggest investment group BlackRock’s private-credit investing arm and other lenders, the Wall Street Journal reported on Thursday.
According to the WSJ report, BlackRock’s private credit investment arm, HPS Investment Partners, are now trying to recover the money after falling victim to what it calls a ‘breathtaking’ fraud.
Bankim Brahmbhatt, the owner of US-based Broadband Telecom and Bridgevoice, has been accused of fabricating accounts receivable that were supposed to be used as loan collateral.
What is the case against Bankim Brahmbhatt?
The lawsuit, filed in August, alleges that HPS had provided loans to Brahmbhatt’s companies on the condition that they pledged millions of dollars owed by customers as collateral for the money.
The lenders have now accused that Brahmbhatt’s companies owe them more than $500 million.
BlackRock has also claimed that when the verification process of the account receivables started, it was found that the funds from the loan was diverted offshore accounts in India and Mauritius.
According to the WSJ report quoting people familiar with the matter, BNP Paribas helped BlackRock’s HPS Investment Partners finance the loans to Brahmbhatt’s companies.
HPS, which was bought earlier this year by BlackRock, started lending to at least one financing arm affiliated with Brahmbhatt’s telecom companies in September 2020.
Since the case was filed in August, several companies linked to Brahmbhatt including New York-based invoice financing firm Carriox Capital, have since filed for Chapter 11 protection in the US.
Meanwhile, the lenders in their lawsuit said that Brahmbhatt had used fake invoices, contracts and emails over the past two years to make it appear as if the money was owed to established telecom companies.
“Brahmbhatt created an elaborate balance sheet of assets that existed only on paper,” lawyers for the lenders wrote.
Following its initial 2020 credit, HPS hiked the amount of its debt investment to about $385 million in early 2021, and then to around $430 million in August 2024.
Nearly half of the loan to Brahmbhatt’s Carriox and affiliated entities were financed by BNP Paribas, the people quoted by WSJ said.
Where is Bankim Brahmbhatt now?
According to the report, an HPS employee in July had noticed the irregularities with certain email addresses that purportedly came from Carriox customers.
That led to suspicions, with HPS officials enquiring Bankim Brahmbhatt about the alleged irregularities. At the time, the businessman had assured them nothing was wrong, but later stopped picking up their calls.
When an HPS employee visited the offices of Brahmbhatt in New York’s Garden City in July, they were found to be closed.
On Wednesday, office suite was locked and appeared vacant, and nobody answered the bell at his listed residence in Garden City. Two BMWs, a Porsche, a Tesla and an Audi were seen parked in the driveway, and a package next to the front door lay unattended.
HPS has told some clients they believed Brahmbhatt is in India, according to the report.
Who is Bankim Brahmbhatt?
Bankim Brahmbhatt is the founder of Bankai Group, and has been in the telecom industry for over three decades.
His companies Broadband Telecom and Bridgevoice sell services and infrastructure to other telecom companies.
The LinkedIn account of Bankim Brahmbhatt seemed to be deleted when Mint tried to access it.
Key Takeaways
- Bankim Brahmbhatt is at the heart of a $500 million scam.
- BlackRock claims that his companies had diverted funds to offshore accounts using fraudulent identities.
- The exact location of Bankim Brahmbhatt is not known yet.
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