India: Trump-Connected Developer Accused of Fraud

Published: 26 June 2018

By Lydia Osborne

Two UK and US hedge funds accuse one of India’s largest real estate developers of defrauding foreign investors out of some US$1.5 billion in a conspiracy involving shadow companies, document dumps, and “astonishing theft,” Bloomberg reported Monday.

In potentially one of the largest private equity scams ever, the managing director of IREO Management, Lalit Goyal, allegedly siphoned billions from a company fund in which New York-based Axon Capital and London-based Children’s Investment Fund Foundation invested about $300 million.

In 2016, IREO partnered with the Trump Organization to build an office tower on the outskirts of New Delhi. In a statement at the time, Donald Trump Jr. said, “IREO is truly a fantastic group and we are looking forward to pushing the boundaries together to create what will soon be one of the most exciting and sought-after commercial towers in India.”

The same year, Axon and the Children’s Investment Fund filed a legal proceeding to stop IREO executives from withdrawing management fees from the fund, according to the Washington Post.

“Someone cannot simply just take billions of dollars of our money and get away with it,” Axon’s CEO Dinakar Singh said at the Westin New York Grand Central hotel on Monday.

“If we do nothing, we will largely bleed dry and get nothing back,” he told about 70 investors, according to Bloomberg.

There are several hundred other investors who have been burned by IREO, according to Bloomberg, including Notre Dame University, University of Rochester, and Stanford University,  

According to the allegations, Goyal embezzled the money through a web of shadow companies connected to his friends, relatives, and business associates. Axon and the Children’s Investment Fund filed two complaints with New Delhi police in 2018 and have sought an asset protection order from India’s high court.

Subsequently, Goyal has dismissed 150 employees and transferred IREO assets into this wife’s name in the past three months, according to Bloomberg. Company employees have also allegedly loaded stacks of documents and records into vans from the company’s main office.

The former CEO of IREO, Ramesh Sanka, said in documents obtained by the Associated Press that he saw “various acts of cheating, fraud and misappropriation of money” at his former employer that created “huge wrongful gains” for the company’s managing director and his associates, according to USA Today.

Sanka quit the company in late 2016 because he was “increasingly uncomfortable with the way in which IREO’s business was being conducted,” USA Today reported from a police complaint filed in February.

The Trump Organization has five projects in various stages of development in India, making it the brand’s second largest market outside of the US.