Monday, November 17, 2014

Illinois Local Governments Lose Over $50 Million Invested In Local Government Investment Pool: Florida Banker Blamed

Nik Patel
The Illinois Metropolitan Investment Fund ("IMET") manages about $1.5 billion for nearly 300 municipalities and local government entities across Illinois through a pooled investment arrangement. Indiana has a similar investment pool administered by the Indiana State Treasurer's Office. According to a Chicago Tribune report, more than $50 million may have been lost through a fraud scheme devised by a 31-year old Florida banker, Nik Patel, CEO of First Farmers Financial. Patel was arrested last month by federal authorities for selling more than $150 million in fraudulent loans to a Milwaukee-based company, Pennant Investments, which served as an outside financial adviser for IMET.

According to the federal charging information, Patel sold 25 loans or repurchase agreements to Pennant under the false pretense that they were federally-guaranteed loans by the USDA. More than $50 million of the repurchase agreements made by Pennant were made with IMET funds. Patel was an authorized lender for a USDA-run loan program. In a lawsuit filed against Patel by Pennant, it is alleged that Patel invented borrowers and the loans represented by the repurchase agreements are worthless. Patel used the money acquired from the repurchase agreements to acquire Florida real estate, other investments and a luxury home.

Pennant has been successful in seizing some of First Farmer's assets in Florida. Pennant asked USDA to honor the loan guarantees fraudulently made by Patel, but it has declined to do so. "The loan documents did not reference any loans that were subject to valid loan guarantees issued under USDA's business and industry loan program," the USDA said. IMET was one of Pennant's largest investors in the fraudulent loans. Most of Pennant's clients are located in Illinois and include community banks and retirement plans. The Harvard Savings Bank in Harvard, Illinois disclosed it has $8.5 million in impaired assets as a result of Patel's fraud and is considering its options, which may include putting the bank up for sale.

Not surprisingly, Patel made large political contributions down in Florida. He hosted a fundraiser in his home for Gov. Rick Scott (R) that raised more than $100,000 and donated more than a $100,000 to the Florida Republican Party. Scott's campaign donated $2,800 to charitable causes, representing the amount the governor's campaign committee directly received from Patel. His fraud has placed several major hotel projects in which he invested money in the Orlando area in jeopardy. It was also reported that Patel lied about being a graduate of the University of Central Florida.


Anonymous said...

Speaking of Florida, did Ogden drop his law license because he spent all Summer in awesome Tampa and has no interest in remaining in Indiana?

Just wondering.

Gary R. Welsh said...

While don't you ask him that question?