Indian telecom player Bankim Brahmbhatt bunks US after $ 500 rip-off

The TOI correspondent from Washington: With two BMWs, a Porsche, a Tesla, and an Audi gathering dust in the driveway and unopened mail at the door of his New York Mcmansion, Bankim Brahmbhatt is said to be on the lam, having allegedly scammed the private credit arm of Blackrock, the world’s largest asset manager, and others, of $ 500 million.In a financial scandal that has rocked the US private credit market, the Indian-origin entrepreneur and founder-CEO of US-based telecom firms Broadband Telecom and Bridgevoice (under the Bankai Group), is accused of orchestrating a massive fraud using phony accounts and fabricated emails to secure asset-based financing from heavyweights like Blackrock subsidiary HPS Investment Partners and BNP Paribas.The deception, first reported in the Wall Street Journal, unraveled in July when an HPS employee spotted suspicious customer emails originating from fake domains mimicking real telecom giants like T-Mobile and Telstra.

The rip-off spanned more than five years. Investigations by accounting and law firms, including Deloitte and CBiz, confirmed widespread falsification: all submitted invoices and email addresses were bogus.

Lenders claim Brahmbhatt built "an elaborate balance sheet of assets that existed only on paper," with the Belgian telecom firm BICS, cited in the collateral, denying any ties, and labeling it a "confirmed fraud attempt."

HPS began lending to Brahmbhatt's financing arm in September 2020, ramping up to $430 million by August 2024, with BNP Paribas covering roughly half the total exposure. Confronted in July, Brahmbhatt reportedly dismissed concerns before going incommunicado.Months later, Broadband Telecom, Bridgevoice, related entities Carriox Capital II and BB Capital SPV, and Brahmbhatt himself filed for Chapter 11 bankruptcy on August 12 this year in the US Bankruptcy Court of Eastern District of New York.

Court documents confirm over $500M owed, primarily to HPS and BNP Paribas.Subsequently, HPS representatives found Brahmbhatt's Garden City, Long Island, office locked and deserted. An employee at an adjacent office told WSJ she hadn’t seen anyone enter or leave the offices recently. Authorities believe Brahmbhatt may have fled to India. The lenders also believe he may have transferred assets to accounts in India and Mauritius.Very little is known about Brahmbhatt. He is reported to have attended St Xavier's School in Gandhinagar, Gujarat, and began his business career in 1989 with a push-button telephone manufacturing unit in India, later expanding to satellite dishes and media receivers. He was featured in Capacity's 2023 Power 100 List for his work in the telecom industry. Although any write off would be chump change for Blackrock, which manages $ 13.5 trillion in assets, the scandal exposes vulnerabilities in private credit's $1.7 trillion boom which now involve faster deals, less oversight, and heavy borrower-data reliance.

Experts warn of a "cockroach effect," a term coined by economist Mohamed El-Erian, signaling more hidden frauds due to lax, unregulated lending. In recent weeks, Wall Street has been shaken by two other such scandals: First Brands, an auto-parts supplier founded by Malaysian-Indian businessman Patrick James, also filed for bankruptcy earlier this year after the market lost confidence in its use of off-balance-sheet debt. Separately, Tricolor, a chain of auto dealers that financed subprime consumers, is accused by a bank partner of pledging fictitious car loans and has filed for bankruptcy.

For HPS, BNP, and investors, recouping even part of the half-billion will now involve a global chase, including lawsuits in India and Mauritius and litigation to freeze offshore funds.