Alleged $500,000,000 Fraud Scheme Hits BlackRock – Asset Giant Accuses Little-Known Telecom Companies of Orchestrating Massive Scam

The asset management giant BlackRock says it has lost hundreds of millions of dollars to two little-known telecom companies that allegedly falsified collateral to obtain massive loans.

BlackRock’s private credit investing arm HPS Investment Partners and other lenders are trying to recover the funds after falling victim to what they called a “breathtaking” fraud, reports the Wall Street Journal.

The lenders accuse the owner of the companies, Bankim Brahmbhatt, of fabricating accounts receivable used as loan collateral.

The dispute centers on asset-based finance, where revenue streams serve as collateral, and shines new light on private-credit markets, following the auto industry collapses of First Brands and Tricolor.

BNP Paribas financed nearly half of the loan, and the lenders filed a lawsuit in August claiming his companies owe over $500 million. Brahmbhatt disputes the fraud allegations.

Irregularities surfaced in July when HPS noticed fake email domains mimicking real telecom customers, and a visit to offices in New York found them closed.

The lenders say an investigation then revealed all customer emails provided over two years are fake, with fraudulent contracts dating to 2018.

Brahmbhatt is accused of transferring assets to offshore accounts in India and Mauritius.

His telecom companies and financing arms filed for bankruptcy in August, joined by Brahmbhatt personally on August 12th. HPS believes Brahmbhatt himself is in India.

A person close to BlackRock says the loss is a fraction of HPS’s $179 billion assets, with no material impact on fund returns.

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