(Bloomberg) -- A Florida businessman has been arrested and charged in relation to a $100 million fraud that contributed to the failure of Puerto Rico's second-largest commercial bank.
Jack Kachkar, 53, is accused of using his pharmaceutical company, Inyx Inc., to draw tens of millions of dollars in credit from Westernbank Puerto Rico and then spending the money on luxury items such as a $6.5 million Miami Beach home and a private airplane. Kachkar was charged with eight counts of wire fraud in an an indictment unsealed Friday, according to a Justice Department statement.
Gustavo Lage, a lawyer for Kachkar, didn't immediately respond to email and phone messages seeking comment. Kachkar didn't immediately respond to an e-mail seeking comment.
Born in Syria to Armenian parents and raised in Canada, Kachkar is best known for trying to buy the French soccer team Olympique de Marseille for $148 million from Robert Louis-Dreyfus in 2007. The French news media documented Kachkar's tour of the team's headquarters and his visit with players, including photographs of him dancing in the locker room after a victory.
The soccer deal fell apart after Kachkar didn't come through with the money, and Kachkar was investigated by French authorities on the suspicion that he produced a forged letter of credit from Countrywide Financial Corp. as part of his effort to buy the team, according to court documents.
Seeking Payment
Around the time of the soccer negotiations, Westernbank was seeking payment for the millions it had loaned to Kachkar's company, Inyx, according to court papers in a civil racketeering suit brought by Westernbank against Kachkar. Inyx's credit line tab with the lender had grown to more than $100 million in less than two years. The bank was taken over by the Federal Deposit Insurance Corp. in 2010.
A civil fraud suit by the FDIC contends that Inyx used several accounting scams to open and then draw on the credit line from Westernbank -- such as false invoices or directing customers to deposit payments in secret bank accounts. As debts mounted, Westernbank kept lending to Inyx on the company's promise that financing deals were in the works with Goldman Sachs Group Inc., Credit Suisse Group AG and a son of Moammar Qaddafi, the suit alleges.
The money never materialized, and Inyx filed for Chapter 11 bankruptcy protection in 2007.
'Allegedly Misappropriated'
"During the course of the scheme, Kachkar allegedly misappropriated approximately $25 million in fraudulent proceeds to his personal bank accounts and also misappropriated an additional $9.6 million in fraudulent proceeds to a bank account in the name of his associate," according to the Justice Department statement. "Kachkar also allegedly used the proceeds from the scheme to pay for, among other things, multiple high-end real estate properties in Miami, luxury vehicles and a private jet."
Westernbank took a loss of more than $140 million on the Kachkar loans, which contributed to the bank's failure in 2010, according to a report by the FDIC's inspector general.
To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net. To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, David S. Joachim
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