Elderly Indian American couple in Illinois charged with $40 million bank fraud

OAK BROOK, IL (TIP): An Indian American couple from Oak Brook, Illinois, Pethinaidu Veluchamy and his wife, Parameswari Veluchamy, who owned First Mutual Bancorp of Illinois and other financial entities intentionally hid cash and assets from creditors after defaulting on $40 million in personal and corporate loans, according to an indictment returned in federal court in Chicago, on Wednesday, June 22.

PETHINAIDU VELUCHAMY and his wife, PARAMESWARI VELUCHAMY, were the principal shareholders of First Mutual Bancorp of Illinois Inc., a holding company for Mutual Bank. In June 2009, according to the indictment, the couple defaulted on personal and corporate loans totaling $40 million.

The following month, Mutual Bank was shut down by federal regulators. Prior to the shutdown and continuing until at least November 2015, the couple hid millions of dollars in assets by falsifying documents, moving money into domestic and foreign bank accounts, and directing employees to destroy financial records, the indictment states.

According to the indictment, the couple also transferred cash to their two adult children, with nearly $8.5 million going to one and more than $10.1 million to the other.

The 12-count indictment was returned yesterday in U.S. District Court in Chicago. It charges Pethinaidu Veluchamy, 70, with four counts of bank fraud, two counts of destroying records to obstruct a bankruptcy proceeding, two counts of making a false statement under oath in a bankruptcy proceeding, and one count of making a false statement in an application for a U.S. passport. Parameswari Veluchamy, 65, is charged with four counts of bank fraud, two counts of destroying records to obstruct a bankruptcy proceeding, one count of making a false statement under oath in a bankruptcy proceeding, and one count of making a false statement in an application for a U.S. passport.

Arraignments in federal court in Chicago have not yet been scheduled.

According to the charges, Pethinaidu Veluchamy caused his relatives to obtain legal judgments against him for loans for which he knew he was not personally liable, so that he could later assert those liens as superior to a bank creditor’s anticipated judgments. In a 2011 deposition in a separate court case, Pethinaidu Veluchamy fraudulently claimed that certain funds transferred to his adult children represented indemnity obligations for their investments in First Mutual Bancorp, according to the indictment. He produced a document to support this claim, but when questioned about the timing of the creation of the document, Pethinaidu Veluchamy claimed the computer he had used to create it crashed in a snowstorm, according to the indictment.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Each count of bank fraud is punishable by up to 30 years in prison and a $1 million fine. Destroying records to obstruct a bankruptcy proceeding carries a maximum sentence of 20 years. The maximum sentence for making a false statement under oath in a bankruptcy proceeding is five years, while making a false statement in an application for a U.S. passport is punishable by up to ten years.

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