A Florida man, the former CEO and chairman of a now-bankrupt multinational pharmaceutical company, was sentenced this week to 30 years in prison (followed by five years of supervised release) for his role in a $100 million scheme to defraud Westernbank of Puerto Rico.
Jack Kachkar, 56, was sentenced by U.S. District Judge Donald Graham of the Southern District of Florida. Judge Graham also ordered the defendant to pay $103,490,005 in restitution to the Federal Deposit Insurance Corporation, as receiver for Westernbank.
Kachkar was convicted on Feb. 4 after a three-week trial of eight counts of wire fraud affecting a financial institution. According to evidence presented at trial, from 2005 to 2007, he served as chairman and CEO of pharmaceutical manufacturer Inyx.
Beginning in early 2005, he caused Westernbank to enter into a series of loan agreements in exchange for a security interest in the assets of Inyx and its subsidiaries. Under the loan agreements, the bank agreed to advance money based on Inyx’s customer invoices from “actual and bona fide” sales to Inyx customers, the Justice Department said.
The trial evidence showed Kachkar orchestrated a scheme to defraud Westernbank by causing numerous Inyx employees to make tens of millions of dollars’ worth of fake customer invoices, purportedly payable by customers in the United Kingdom, Sweden, and elsewhere. Kachkar caused these invoices to be presented to Westernbank as valid invoices.
During the course of the scheme, Westernbank lent approximately $142 million to Kachkar, primarily based on false and fraudulent customer invoices. The evidence showed Kachkar diverted tens of millions of dollars for his own personal benefit, including for the purchase of, among other things, a private jet; luxury homes in Key Biscayne and Brickell, Miami; luxury cars; luxury hotel stays; extravagant jewelry; and clothing expenditures.
In or around June 2007, Westernbank declared the loan in default and ultimately suffered losses exceeding $100 million on the Inyx loans. According to trial evidence, these losses later triggered a series of events leading to Westernbank’s insolvency. At the time of its collapse, Westernbank had approximately 1,500 employees and was one of the largest banks in Puerto Rico.