Govt Drops Debt Case Bizmans $14M bind ends in deal to pay 125G

The federal government has agreed to settle an estimated $14 million debt owed by a businessman who was one of Hillary Rodham Clinton's biggest campaign financiers.

The deal: He repays $125,000. The government agrees to drop its claims that he defrauded a bank and made false statements to hide his assets.

The proposed settlement, filed in federal Bankruptcy Court in Manhattan Tuesday, would close the books on a Federal Deposit Insurance Corp. case against Sant Chatwal, an Indian-American restaurateur and hotelier who has allegedly stiffed governments, banks and creditors for tens of millions of dollars - yet continues to live in luxury.

A hearing on the settlement, which must be approved by Federal Judge Cornelius Blackshear, is set for Dec. 18.

The settlement is a huge about-face for the FDIC.

For nearly four years, the agency has accused Chatwal of being a major player in a scheme to bilk the former First New York Bank for Business - where Chatwal served as a director - of $25 million in improper loans made by bank directors to themselves.

Chatwal reported a net worth of $46 million when he joined the bank in 1987. But by 1997, after three Indian banks forced Chatwal into bankruptcy court to recover $30 million owed them, Chatwal told the FDIC he had only $100 in cash and a net worth of $2,600.

Chatwal's luxury upper East Side penthouse no longer belonged to his wife, who had borrowed $1.8 million from her husband's bank to buy it, but to a real estate firm that listed Chatwal's younger brother Iqbal as president.

Chatwal told the FDIC under oath that he didn't know where all the money went and no longer had financial records to explain it.

The FDIC changed its position last week. "We found no evidence of hidden assets after due diligence," said a spokesman, Phillip Battey.

Battey said the FDIC's bank insurance fund will absorb the $13.9 million Chatwal loss.

Chatwal's attorney would not comment on the case.

Last month, the Daily News reported that Chatwal had funneled at least $210,000 in soft money from at least 14 separate businesses to Clinton's Senate campaign on one day, Sept. 21.

Battey provided a sworn statement the FDIC obtained from Chatwal, who said he did not make any personal contributions to Clinton. He said $150,000 was contributed by Hampshire Hotels, the chain he began, but he said he owns no stock in the business, which he described as "my employer."

Monday, December 4th 2000, 2:15AM
Source: Daily News