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Miami Drug Company CEO Guilty of Fraud So Large He Crashed a Puerto Rican Bank
Angelb81 / Wikimedia Commons

Miami Drug Company CEO Guilty of Fraud So Large He Crashed a Puerto Rican Bank

Westernbank used to be one of the largest financial institutions in Puerto Rico. It once employed 1,500 people.

But it took just one man to take down the San Juan-based bank. In 2010, Key Biscayne resident Jack Kachkar ended the bank's operation through a $142 million fraud scheme, prosecutors say. From 2005 to 2007, Kachkar's pharmaceutical company, Inyx, allegedly faked paperwork that persuaded Westernbank to loan him $142 million. On Monday, a federal court found Kachkar guilty of eight counts of wire fraud affecting a financial institution.

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“Jack Kachkar’s fraud caused substantial harm to the 1,500 employees of Westernbank and the people of Puerto Rico,” Ariana Fajardo Orshan, chief federal prosecutor for the Southern District of Florida, said in a media release. “The U.S. Attorney’s Office remains committed to the prosecution of those individuals and corporations that use Miami and other South Florida communities as their base to operate multinational fraud schemes.” (The Miami Herald first reported the conviction.)

But before becoming internationally famous for stealing huge sums of money, Kachkar was a wannabe sports team owner. In 2007, he tried to buy a majority stake in the French soccer club Olympique de Marseille, one of the most popular and storied football squads in Europe. Kachkar nearly succeeded — the French press reported he even danced with the team's players inside the Marseille locker room at one point. He'd offered the team's then-majority shareholder, Robert Louis-Dreyfus (a second cousin of Seinfeld and Veep star Julia Louis-Dreyfus), 180 million Canadian dollars for a controlling interest in the team.

But the deal fell through a few weeks later when local reporters and the French Ministry of Finance began checking out Kachkar's extremely sketchy finances. He had been banned from running companies in Ireland after allegedly siphoning money from an Irish company to a different country.

After the team discovered Kachkar was a less-than-upstanding businessman, Louis-Dreyfus cut off negotiations. Then the deal crashed along with Kachkar's pharmaceutical career. Inyx, the company he founded in 2003, filed for bankruptcy.

During the company's last two years, Miami federal prosecutors say, Kachkar requested a series of loans from Westernbank in return for Inyx shares. He made "tens of millions of dollars' worth" of fake payment receipts to convince the bank he could repay the loans and lied spectacularly to con Westernbank.

Prosecutors said the following in a media release about the case:

Kachkar 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 showed. In fact, this additional collateral was worth barely a fraction of that represented by Kachkar.

Kachkar lied not only about his finances, but also about use of the loaned money. Some of it bought him fancy homes in Key Biscayne and Brickell, luxury cars, expensive clothing, jewelry, and a private plane. Kachkar later claimed he'd "sold" the jet and tried to deposit a $3 million check for the sale into Mellon Bank. In reality, even that check was bogus.

“This defendant’s greed was powerful enough to destroy a bank, taking with it the jobs of approximately 1,500 hard-working citizens of Puerto Rico,” Douglas A. Leff, the FBI's special agent in charge of the case, said.

Thanks to Kachkar, Westernbank's assets now belong to its former competitor, Banco Popular de Puerto Rico.

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