A Key Biscayne, Florida, resident and the former CEO of a now-bankrupt multinational pharmaceutical company was sentenced to 30 years in prison followed by five years of supervised release yesterday for his role in a $100 million scheme to defraud Westernbank of Puerto Rico.
The losses triggered a series of events leading to Westernbank’s insolvency and ultimate collapse.
Jack Kachkar, 56, was sentenced by U.S. District Judge Donald L. Graham of the Southern District of Florida, who also presided over the trial in this case. Graham also ordered the defendant to pay $103.4 million in restitution to the FDIC, as receiver for Westernbank.
Kachkar was convicted on Feb. 4, 2019, after a three-week trial, of eight counts of wire fraud affecting a financial institution
According to evidence presented at trial, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., a publicly traded multinational pharmaceutical manufacturing company.
Beginning in early 2005, Kachkar caused Westernbank to enter into a series of loan agreements in exchange for a security interest in the assets of Inyx and its subsidiaries.
Under the loan agreements, Westernbank agreed to advance money based on Inyx’s customer invoices from “actual and bona fide” sales to Inyx customers, the evidence showed.
The trial evidence showed that Kachkar orchestrated a scheme to defraud Westernbank by causing numerous Inyx employees to make tens of millions of dollars-worth of fake customer invoices purportedly payable by customers in the United Kingdom, Sweden and elsewhere. Kachkar caused these invoices to be presented to Westernbank as valid invoices.
“He made false and fraudulent representations to Westernbank executives about purported and imminent repayments from lenders in the United Kingdom, Norway, Libya and elsewhere in order to lull Westernbank into continuing to lend money to Inyx,” the evidence showed.
“In fact, these lenders had not agreed to repay Westernbank’s loan. Kachkar made false and fraudulent representations to Westernbank executives that he had additional collateral, including purported mines in Mexico and Canada worth hundreds of millions of dollars, to induce Westernbank to lend additional funds,” the evidence also showed.
The additional collateral was worth barely a fraction of that represented by Kachkar.
During the course of the scheme, Kachkar caused Westernbank to lend approximately $142 million, primarily based on false and fraudulent customer invoices.
The evidence showed that the defendant diverted tens of millions of dollars for his own personal benefit, including for the purchase of, among other things, a private jet, luxury homes in Key Biscayne and Brickell, Miami, luxury cars, luxury hotel stays, and extravagant jewelry and clothing expenditures.
In or around June 2007, Westernbank declared the loan in default and ultimately suffered losses exceeding $100 million.
According to trial evidence, these losses later triggered a series of events leading to Westernbank’s insolvency and ultimate collapse. At the time of its collapse in 2010, Westernbank had approximately 1,500 employees and was one of the largest banks in Puerto Rico.