- Father and son accused of $100M fraud.
- DOJ says they used shell companies.
- The case is civil, not criminal.
AN INDIAN-ORIGIN FATHER and son who operate hotels in the U.S. are accused of securing more than $100 million in loans despite repeated defaults, bankruptcies and court judgments. Pankaj and Rajan Sheth allegedly used shell companies and other deceptions to hide ownership.
The allegations appear in a 332-page civil complaint the U.S. Department of Justice filed Aug. 14 in the U.S. District Court for the Eastern District of Pennsylvania. The complaint also names five other relatives, 21 businesses and eight associates, according to The Times of India. Prosecutors allege they used multiple companies and "straw owners" to hide who controlled the hotels and to obtain new financing, including loans backed by federal guarantees.
According to the DOJ, the family would borrow against a hotel, use the proceeds to repay an older debt, then seek another loan when the new debt came due. If financing fell through, the complaint says, the family sometimes filed for bankruptcy to delay foreclosure. New loan applications allegedly concealed links to earlier borrowers and, in some cases, misstated management experience and personal finances or included forged signatures.
"The Sheths repeated this cycle many times," prosecutors alleged in the complaint.
The complaint said the hotels were often understaffed and underfunded, with some facing code violations, liens and public nuisance complaints. It also alleges the family shuffled ownership records to obscure the paper trail across corporate and tax filings.
One New Jersey transaction is cited as an example. Prosecutors say the Sheths sold a hotel to a company they controlled and got relief from most of a federally guaranteed loan.
However, Rajan Sheth denied the allegations and said the business is legitimate. Family attorney Richard Scheff told NJ.com that his clients deny liability and expect to be vindicated at trial.
The government is seeking repayment of its losses, up to three times those damages, and civil penalties.
The Trump administration plans to revoke up to 200,000 business and tourist visas held by U.S. asylum seekers.
