Earlier on Monday, in federal court in Brooklyn, Pushpesh Kumar Baid, also known as “PK Jain,” pleaded guilty to conspiracy to commit wire fraud in connection with a scheme to defraud investors in Tradepay Capital LLC (Tradepay), a purported factoring company.
The proceeding was held before United States Magistrate Judge Lois Bloom. When sentenced, Baid faces a maximum sentence of 20 years’ imprisonment, restitution of over $35 million and forfeiture of over $2.6 million.
John J. Durham, United States Attorney for the Eastern District of New York, and Christopher G. Raia, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.
“Through a complex web of shell companies, straw bank accounts, fraudulent documents, and other lies, Baid and his co-conspirators deceived their victims into investing tens of millions of dollars into a business that did not exist,” stated United States Attorney Durham. “Today’s plea demonstrates that my Office will hold accountable fraudsters like Baid who enrich themselves at their investors’ expense.”
Durham appreciated the Internal Revenue Service, Criminal Investigations, for its work on the case.
As outlined in court filings, Baid was the business head of Tradepay, which purported to be an international factoring business run by an executive team experienced in factoring invoices in particular industries and geographic regions.
Factoring involves the sale of an invoice to a third party at a discount. In a factoring transaction, the seller of an invoice obtains immediate funding from the buyer of the invoice, and the buyer of the invoice makes a profit when the invoice is paid in full.
Between April 2017 and October 2019, Baid and his co-conspirators implemented a scheme to defraud investors in Tradepay by making it appear that Tradepay was a legitimate and successful business when it was, in fact, an elaborate scam.
For example, the hundreds of invoices from various businesses that Tradepay purported to be factoring were fraudulent and included fake signatures for both sides of the transactions.
Baid and his co-conspirators also funnelled millions of dollars of investors’ funds—which they represented would be sent to Tradepay’s business partners—into a sprawling network of bank accounts that Baid controlled through shell entities and straw signatories.
From those accounts, Baid and his co-conspirators spent millions of dollars on personal expenses, including cash withdrawals and purchases of luxury cars and watches. Baid even lied about his identity, concealing his real name from investors to obscure the fact that he was wanted for criminal offences abroad.
Investors in Tradepay initially received payments on the invoices, which led them to contribute increasingly large sums of capital. By approximately July 2019, however, the payments on the invoices stopped, resulting in roughly $35 million in losses.
As part of his plea, Baid also admitted to defrauding investors in Luxestreet Inc., formerly Asset Capital Partners LLC (Luxestreet), and agreed to pay restitution to Luxestreet’s investors. Baid claimed Luxestreet operated like a pawn shop for high-end goods, including luxury watches.
In reality, Luxestreet contracts were forged, and the physical watches held by the company were mere knockoffs.
