CEO OF INTERNATIONAL METAL TRADING COMPANY
SENTENCED TO PRISON FOR $683 MILLION FRAUD SCHEME

MICHAEL J. GARCIA, United States Attorney for the Southern District of New York, announced that NARENDRA KUMAR RASTOGI was sentenced today to 84 months in prison on charges arising out of his leadership role in a sprawling, international Ponzi scheme. The scheme resulted in over $680 million in losses to approximately 20 banks worldwide (including J.P. Morgan Chase & Co., Fleet National Bank, PNC Bank, N.A., KBC Bank, N.V., Hypo Vereins Bank, N.A., Dresdner Bank Lateinamerika AG, China Trust
Bank, and General Bank). NARENDRA RASTOGI, who pleaded guilty pursuant to a cooperation agreement, recently testified as a prosecution witness in the United Kingdom trial, which began in September 2007, and is ongoing. The sentence was imposed by United States District Judge RICHARD M. BERMAN in Manhattan federal court. According to documents filed and the evidence at trial in this and related cases in the Southern District of New York and the United Kingdom:

NARENDRA RASTOGI and his brother, VIRENDRA RASTOGI -- charged by the United Kingdom’s Serious Fraud Office(“SFO”) with three other individuals allegedly involved in the Allied Deals scheme in a related case -- were leaders in a far-reaching scheme to defraud over 20 major U.S. and foreign banks by inducing them to issue hundreds of millions of dollars in loans. Allied Deals, Inc., Hampton Lane, Inc., and SAI Commodity in the United States and RBG Resources in the United Kingdom (collectively, the "Allied Deals companies") purported to be in the business of brokering trades in non-ferrous metals. The Allied Deals companies were controlled by NARENDRA RASTOGI in the United
States and VIRENDRA RASTOGI in the United Kingdom.

As part of their business, the Allied Deals companies purportedly would arrange for sales between buyers and sellers of metal in legitimate, "arms-length" transactions (transactions
negotiated by unrelated parties, each acting in his/her own best interest). Purportedly to finance those metal sales, the defendants then would arrange for loans with banks, usually to be
repaid after 180 days. As collateral for the loans, the banks relied on Allied Deals' accounts receivables (the money that Allied Deals was due from the customers for the metal
transactions), expecting that the supposed loans would get repaid when the customers repaid Allied Deals for the metal that had been purchased.

In fact, hundreds, if not thousands, of metal transactions upon which the loans were based simply did not exist. NARENDRA RASTOGI and his co-conspirators had set up and
controlled an elaborate network of hundreds of sham, nominee companies around the world (which they called "group companies") to serve as fake purchasers of metal from Allied Deals, so that the defendants could get loans from the victim banks.

RASTOGI and his co-conspirators used loan proceeds from one victim bank to make the loan payments required by another victim bank, while concealing that the newly-issued loans were not being used to fund actual, arms-length metal transactions and that the money used to pay off the loans had not been provided by the buyers of metal in bank-financed sales.

As part of the scheme, RASTOGI and his co-conspirators went to extraordinary lengths to create a facade that sham, controlled “customers” were in fact real, independent metals
companies with actual employees and offices and with no ownership or control relationships with the defendants. Among other things, a number of co-conspirators posed as Allied Deals customers, established offices and phone lines for the sham companies in the US and abroad, arranged for fake letterhead and bank accounts, and were prepared to field calls from bankers or auditors.

RASTOGI and his co-conspirators also created fake credit histories for the sham customers. Among other things, they established a fake credit reporting agency, which then would
generate false credit reports attesting to the credit-worthiness of the sham companies. These credit reports then were kept in a series of "credit files" that Allied Deals maintained for each of its sham customers, which files could be shown to banks and/or auditors to further the deception that they were real customers.

Allied Deals employees also furthered the scheme by forging many of the documents that the banks required in order to obtain loans. For example, the documentation department of
Allied Deals would create fake purchase contracts at Allied Deals' office in New Jersey, cut and paste a signature for the purported customer, and then fax the document between fax
machines at Allied Deals, in order to make it appear that the document had come from overseas. The evidence also established that Allied Deals employees routinely forged such key shipping documents as steamship line bills of lading, and Chamber of Commerce certificates of origin.

RASTOGI and his co-conspirators also would ship the same metal between multiple customers at different ports around the world, using each repeated metal transaction to support an additional loan. To increase the declared value of the metal being shipped (and the amount of each loan), Allied Deals employees also would falsely represent on the bill of lading the type of metal in a particular container – stating, for example, that a particular container contained an expensive metal, such as cobalt, when it in fact contained a cheaper metal, such as lead. The defendant and his co-conspirators also would use the same collateral for two different loans by submitting purportedly "original" bills of lading to more than one bank.

In the spring of 2002, several of the defendants in the United States were assigned the task of fielding telephone calls from auditors or bankers, while posing as a representative of one
or more of the sham companies in the United States. To facilitate this effort, the co-conspirators obtained a number of cellular telephones, each of which was assigned to a particular
sham company. A number of Allied Deals employees then fielded calls from bankers, falsely assuring them that the amounts due would be repaid.

A total of fifteen defendants have been arrested in the United States in connection with the scheme. Nine, including NARENDA RASTOGI, pleaded guilty in advance of trial. Six
defendants in the U.S. case went to trial, five of whom were convicted. Two defendants in the U.S. case remain at large.

RASTOGI pleaded guilty in December 2003, pursuant to a cooperation agreement with the Government, to one count of conspiracy, 28 counts of bank fraud, and one count of conspiracy to commit money laundering. As part of his cooperation, RASTOGI testified in London in the fall of 2007 over the course of six and one half days at the UK trial of his brother VIRENDRA RASTOGI and three others.

In addition to the prison term, NARENDA RASTOGI was sentenced to 5 years of supervised release and ordered to pay restitution of $683,632,800. RASTOGI, age 53, of Gutenberg, New Jersey, has been detained since his arrest in May 2002.

Mr. GARCIA stated: "The Rastogi case involves a massive and sophisticated scheme to steal hundreds of millions of dollars from a number of international banks. The fraud – which
was carried out through a sprawling network of hundreds of sham metal customers, outright falsification of documents, and complex efforts to conceal and further the fraud – was astonishing in scope and magnitude. The success of this investigation and prosecution is a testament to the years of close cooperation between this Office, the FBI, and the United Kingdom's Serious Fraud Office."

Mr. GARCIA thanked the Federal Bureau of Investigation and the United Kingdom's Serious Fraud Office for their work in this investigation and prosecution.

This prosecution is being handled by the Major Crimes Unit of the United States Attorney's Office. Assistant United States Attorney MARCUS A. ASNER is in charge of the prosecution.