Three men, four questions and a 24 million dollar quandary

A court in Hong Kong has ordered Shyam MaheshwariAndreas Vourloumis and Edwin Wongprincipals of the hedge fund SSG Capital a Hong Kongbased asset management firm to answer under oath questions about missing funds relating to a multimillion dollar fraud scheme perpetrated in the United StatesThe principals of SSG Capital are former Lehman Brothers executives based in Hong Kong and Singapore They started SSG Capital following the 2008 bankruptcy of Lehman Brothers Maheshwarialso represents SSG Capital on the Board of Directors of ACRE India an offshoot of Industrial Finance Cooperation of India IFCI a public sector companyPenal noticeThe court in its order has directed the three senior partners in SSG Capital to attend an examination at 15 Queens Road Central Hong Kong If they do not obey the order they may be found guilty of contempt of court and may be sent to prison or fined or have their assets seized The order states that the recording to seek answers for four questions see box from 10 am to 6 pm from October 10 to 12 2018Sources from the US told midday As per procedure the summons needs to be handed over to the person concerned in Hong Kong While Andreas and Edwin have accepted their summons copy after much persuasion and chase Maheshwari who holds an Indian and Hong Kong citizenship is yet to be given the copy of the summonsFBI probeA threeyear investigation conducted by the FBI and IRS resulted in Satish Vuppalapati the MD of Prithvi and Madhavi Vuppalapati being indicted on criminal charges of among others wire fraud and money laundering conspiracy in December 2017 The duo has fled the US to evade prosecution and are believed to be hiding in Hyderabad IndiaIn addition to Kyko there are numerous other entities and individuals that allege to be harmed by the activities of Prithvi and its directors These include Sojitz a Japanese finance company Deutsche Bank India and HSBC Bank India A California resident also came forward in 2014 alleging the Vuppalapatis stole his identity in relation to fraud and racketeering activities The complaint was filed with numerous regulatory bodies including the SEBI ED SFO and othersIn high fraud profile cases such as those of Mehul Choski Vijay Mallya and Nirav Modi the Indian government made an extradition requests and pleas for help from various foreign governments in bringing them to justice We are disappointed that reciprocal treatment by the Indian government is not being shown to bring the Indian nationals to justice said a senior official of KyKo GlobalPrithvis money trailTo follow Prithvis money trail Kyko Global Inc approached the Hong Kong Court which ordered Hang Seng Bank a wholly owned subsidiary of HSBC Bank to produce bank records The records show 35 million in Foreign Currency Convertible Bonds FCCB held in escrow at the UCO Bank in Hong Kong had been transferred and dispersed into numerous entities and offshore companiesKyko thus discovered that Prithvi transferred about 24 million to SSG Capital in Cayman Islands and Value Team Corporation VTC a British Virgin Islands entity controlled by SSG Capitals principalsPursuant to Kykos request the federal court in Washington requested the Hong Kong courts assistance to compel MaheshwariAndreas and Wongto answer questions regarding the 24 million The Hong Kong court granted Kykos requestShyam Maheshwari Andreas Vourloumis and Edwin Wong are listed as the shareholders of VTC according to the infamous Panama Papers which document the myriad ways in which some affluent individuals have exploited secretive offshore tax havens They have not indicated their willingness to Kyko to comply with the Hong Kong courts orderThe lack of cooperation from SSG Capitals principals in explaining the missing funds is deeply concerning the official addedKyko Global reactsKiran Kulkarni CEO Kyko Global IncsaidJones Day the lawyers for SSG Capital in Hong Kong have advised our lawyers that they will be fighting this order from the Hong Kong court and will not appear for deposition I am dismayed why these people continue to fight if they have nothing to hide They refused to cooperate with the subpoena from the Washington Court they refuse to cooperate with our many requests for information and accounting of US 24 million they refuse to accept the service of the Hong Kong Court order and now after catching Mr Wong in the elevator to serve the order they are still continuing to fight a simple matter like thisAmit Punde Company Secretary and Kyko Advisor saidThe proceeds of FCCB were to be used for expansion of the company in US through acquisitions of business or companies It is clear that the funds were not used for acquisitions This could be a clear violation of FEMA regulations A sophisticated finance company such as SSG Capital should be aware of the legal requirements of RBI SEBI other govt agenciesThe other sideWhen midday contacted SSG Capitals Mumbai office it was learnt that Maheshwari was based in Singapore Also their Mumbai legal head Pravin Thomas did not wish to comment and did not respond to an email query sent Attempts to contact Maheshwari on both his Hong Kong and India mobile numbers did not yield any resultAnother email sent to SSG Capitals South Asia General Counsel Richard Yee received this response For the record and to make very clear neither SSG nor any of its directors officers or employees have at any time been sued in the United States courts or anywhere else concerning the unfortunate fraud suffered by Kyko Regrettably Kykos latest efforts are misguided and smacks of desperationWe will not dignify such allegations nor waste time commenting on them hereThis is a matter that will soon come before a Hong Kong court We are confident in our position and will address this matter in the Hong Kong courts Suffice to say we are prepared to take forceful and appropriate legal action to clear our name including seeking compensation in terms of damages and costsFour questionsa How and why SSG Capital and Value Team Corporation owe Prithvi Solutions Inc PSI a sum of US 4000000 and US18900000 respectivelyb Whether the funds owing to PSI were a result of receiving funds from another person or entityc Whether such funds received were transferred by Value Team CorporationSSG Capital to another person or entityd Why Value Team CorporationSSG Capital has not paid PSI Prithvi Solutions or Kyko Global IncThe casemidday had reported about the Department of Justice DoJ investigation into a white collar fraud involving an Indian BSElisted company in USA Prithvi Solutions Inc Partner of India company involved in fraud surrenders in USA dated January 26 2018 Between 2011 and 2012 Prithvi Information Solutions Ltd Prithvi a Hyderabad IT company claimed it had relationships with several multibillion dollar US customers It offered for factoring a type of commercial lending the receivables from five companies which included publicly listed retail energy and telecom giants A factoring relationship started whereby when the customers would confirm invoices from Prithvi Kyko Global Inc a Canadian company Kyko would advance the funds to Prithvi for each invoice and the customer would pay Kyko directly when the invoice was due In February 2013 the payments to Kyko suddenly stopped with more than 17 million owing Kyko investigated and found that Prithvis relationship with these five customers was fictitious Prithvi andMadhavi Vuppalapati its chairwoman have been found liable by the federal court in Washington forcreating fake companies and bank accounts to fraudulently acquire and move millions of dollars In 2013 the Washington federal court ordered Prithvi and various other entities andindividuals to pay 134 million about Rs 950 crore in damages in relation to fraud andRacketeer Influenced and Corrupt Organization Act RICOchargesCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai from food to things to do and events 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