A real estate investment firm, which had partnered with the Trump Organisation on a project in India, has been accused by two other New York and London-based global investment companies of defrauding their foreign investors of at least USD 147 million, a media report said.
A report in The Washington Post said two firms - Children's Investment Fund Foundation, a charity of the British billionaire Christopher Hohn and Axon Partners, an equity firm run by former Goldman Sachs executive Dinakar Singh - invested nearly USD 300 million in the Indian real estate development company IREO.
The two firms filed a criminal complaint with New Delhi police last month alleging that the fund's Indian managing director, Lalit Goyal, co-founder Anurag Bhargava and others engaged in large-scale fraud by illegally siphoning off at least USD 147 million of investor money, the report said. They allege that the actual sum could approach USD 200 million.
The report added that police in New Delhi said they have received the complaint but declined to discuss the matter further.
Both firms declined to comment. While Goyal declined to comment on the allegations through an IREO spokeswoman, in a March 13 letter to IREO investors he wrote that as far as the allegation of fraud, diversion and misappropriation of funds is concerned, this is false, baseless and devoid of any merit.
The Trump Organisation did not return emails or telephone calls requesting comment on the criminal complaint, which does not refer to the organisation's partnership with IREO, the report said.
The report said that according to a 2017 letter to investors, Singh and Hohn were growing increasingly frustrated that IREO's managers seemed difficult to reach and had shown no indication that they were going to return investor money as scheduled, along with what they promised would be significant profits.
Legal proceedings were initiated in Mauritius where the funds are based.
After roughly 10 years, we estimate that investors have received distributions of only 250 million, while management has collected over USD 300 million in management fees, and to this day management does not have a plan for returning out capital before the end of various funds' lives, they wrote to investors in April 2017.
The Children's Investment Fund Foundation and Axon alleged in the criminal complaint that Goyal and others set up a fraudulent web of companies and entities and phony charges to divert more than USD 147 million into their own pockets. They alleged that a project in an undeveloped area in Rajasthan was nothing but a sham...to misappropriate about USD 62 million.
Donald Trump Jr had called IREO truly a fantastic group when the companies had announced collaboration on an office tower project in April 2016.
Trump Jr had visited India in February this year on a much-publicised tour to promote his family company's other Trump-branded towers in the cities of Pune, Mumbai and Kolkata, as well as new residential towers just a few miles away from the planned IREO office tower.
During the trip, Trump Jr told an Indian news channel that his has five incredible deals that are all active, which would include IREO.
The IREO group of funds were founded by Goyal and Bhargava in 2004 to inject foreign capital in India's real estate market.
It now manages over USD 1.6 billion from sovereign wealth and university endowment funds, a portfolio of 1,485 acres in the Delhi area and in the state of Punjab, and 18 million square feet of commercial and residential projects in development, the Washington Post report said adding that Bhargava did not respond to telephone calls or emails requesting comment on the criminal complaint.
Goyal had said in an interview with The Post in early 2017 that the company first approached the Trump Organisation about partnering on a commercial real estate tower around 2013. The two parties had signed a licensing agreement in 2016 for the luxury office building that included use of the Trump name, technical assistance and a percentage of the lease income, Goyal said.
A former CEO of the company, Ramesh Sanka, alerted the investors to potential fraud. His statements and records form the basis of the investors' criminal complaint and as well as Sanka's own whistleblower complaints filed with police and the civil court in neighboring Gurgaon.
According to the report, in his March 13 letter to investors on behalf of IREO, Goyal said that the legal proceedings will discourage investors and buyers and are a needless and unwarranted distraction that will cause significant damage and harm to IREO at a sensitive time when it is in the midst of refinancing.
Addressing Sanka's charges in the letter to investors, Goyal said, We find the timing of his alleged whistle blowing' curious and the manner suspicious to say the least. Ramesh Sanka has made unsubstantiated allegations without producing any concrete or direct evidence, he has resorted to conjectures and surmises coupled with ingenious drafting to give an impression of some alleged wrongdoing.
The letter also notes that Sanka was barred by India's regulator from the securities market for three years for alleged malfeasance at a previous job.