- The Washington Times - Wednesday, August 26, 2009

One of the nation’s top Democratic fundraisers, who helped bring hundreds of thousands of dollars into the presidential campaigns of Hillary Rodham Clinton and later Barack Obama, was arrested and jailed Tuesday on charges that he masterminded a $74 million fraud targeting giant lender Citigroup Inc.

The U.S. attorney in New York announced the arrest of Hassan Nemazee, chairman and chief executive officer of Nemazee Capital Corp., two days after FBI agents interviewed him at Newark Liberty International Airport as he was checking in for a flight to Italy.

Mr. Nemazee, 59, a major figure in Democratic money circles, served as co-chairman of Mrs. Clinton’s presidential bid. He also was a central figure in efforts to unify the party after the divisive 2008 primary fight.

“We are carefully reviewing the allegations and have no further comment at this time,” said New York lawyer Marc Mukasey, who is representing Mr. Nemazee, in an e-mail response to a request for comment. Mr. Nemazee faces a maximum prison term of 30 years and a maximum fine of $1 million, or twice the gain or loss resulting from the crime if convicted, authorities said.

In earlier election cycles, Mr. Nemazee headed up fundraising efforts for the Democratic Senatorial Campaign Committee and oversaw New York fundraising for the 2004 presidential bid of Sen. John Kerry of Massachusetts. His closest association, though, was with the Clintons, to whom he was both a close friend and a major political patron.

Affable and polished, it was Mr. Nemazee who often stepped up at critical moments during the 2008 campaign to speak out for Mrs. Clinton. In one meeting, it was reported that he scolded Democratic National Committee Chairman Howard Dean for not remaining neutral during the difficult final days of the primary season.

As the general election got under way, he simultaneously worked his massive list of wealthy contacts to help bundle more than $500,000 for Mr. Obama and lobbied Obama campaign insiders to find a prominent place for Mrs. Clinton, who he hoped would be chosen as Mr. Obama’s running mate.

After Mr. Obama was elected, Mr. Nemazee donated $50,000 to the president-elect’s inauguration fund. A few months later, he took up the cause of Clinton ally Terry McAuliffe, who needed to raise money for his ill-fated Virginia gubernatorial bid. Mr. Nemazee opened up his Park Avenue apartment for a fundraiser that former President Bill Clinton headlined.

According to the complaint made public Tuesday, Mr. Nemazee was engaged since late 2006 in a fraudulent scheme to induce Citibank, a unit of Citigroup, to lend him up to $74 million.

According to the complaint, Mr. Nemazee fabricated documents to make it appear that other financial institutions held hundreds of millions of dollars of his money, which could be used as collateral to secure the loans.

The complaint says that many of the documents at issue provided Citibank with contact information for the financial institutions that, in reality, led right back to Mr. Nemazee.

“As a result,” according to the complaint, “in the event anyone at Citibank made an effort to confirm the existence of the assets … they would in fact be contacting a telephone number assigned to Nemazee himself, and not any financial institution.”

On Monday, a day after being questioned by the FBI, Mr. Nemazee repaid Citibank the amount he owed from the outstanding loan, a sum in excess of $74 million, according to the complaint.

Mr. Nemazee grew up in Washington, the son of an Iranian philanthropist and shipping magnate who later became a diplomat.

It’s been more than a decade since questions about Mr. Nemazee’s financial dealings wound up scuttling his nomination to be President Clinton’s ambassador to Argentina.

In that case, the Senate sent back his nomination after a Forbes magazine article described how a partnership Mr. Nemazee formed tried to gain a money management contract with the California state pension system by claiming it was “100 percent Hispanic-owned.” In fact, the report said, Mr. Nemazee, an Iranian-American, owned 49 percent. He had obtained a Venezuelan passport in an attempt to portray himself as Hispanic, the report said.

Mr. Nemazee vehemently denied any wrongdoing in that episode.

Several of those who worked with him on behalf of Mrs. Clinton last year privately expressed shock at Tuesday’s arrest, but declined to comment, saying they would prefer to wait and see how the federal case proceeds.

After Tuesday’s bail hearing and a night in jail, Mr. Nemazee was to be released after posting a $25 million bond Wednesday and confined to his home with electronic monitoring.

Mr. Mukasey, at the afternoon hearing Tuesday in Manhattan, denounced the hefty bail figure as “the most onerous” he had ever seen.

According to the company’s Web site, Nemazee Capital was formed in 1987 and has direct and indirect investments in a wide range of businesses, including health care, energy, insurance, investment banking and real estate.

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