New Fraud Charges In Chatwal Court

By Ashok "Sonny" Gupta

An Angry Creditor That Was Not Listed

NEW YORK: Sant Singh’ plate is getting fuller. First three Indian banks dished it out to him when they forced him into an involuntary bankruptcy.

The three, State Bank of India, Bank of Baroda, and Bank of India, all having offices in New York, showed cumulative judgments of over $22 million against the famed hospitality king.

Then the last month, the Federal Deposit Insurance Corporation (FDIC) served Sant Singh Chatwal with the charges of bank fraud, as well as abuse of fiduciary responsibility at the First Bank of New York, formerly known as First Women’s bank. FDIC asserts that Chatwal, as one of the directors, was responsible for as much as $38 million in fraudulent losses as a result of improper loans to himself and others.

Now enters the creditor with by far the longest name or all, New York Hotel and Motel Trades Council and Hotel Association of New York City, Inc. Insurance Fund, Medical Fund, Dental Fund, Pension Fund, Industry Training Fund, Scholarship Fund and Legal Fund. These funds claim that Chatwal did not even list them in his bankruptcy schedules.

Hotel Council First Sues In Federal Court

Only last month, attorneys for this union type hotel organization, presented a federal complaint in the U.S. District Court, Southern District of New York against Sant S. Chatwal, Pardaman K. Chatwal, Kewal K. Chopra and Chatwal Associates, a limited partnership. All four defendants listed 234 West 48Th street as their common address.

In this complaint, Sant Chatwal is listed as the partner with 75% controlling interest. His wife, Pardaman, has 24% while Kewal Chopra controls 1% through corporate shells. The three are individually charged with financial mischief in the fringe benefits accounts of Bombay Palace, Aberdeen Hotel, venue of the Americas Hotel (Ambassador Hotel), Chatwal Inn on Park Avenue, Quality Inn Midtown, Sheffield Hotel, Best Western President Hotel.

Specifically, the Hotel Council asserts that "Chatwal personally breached his fiduciary duty by failing to comply with the plaintiff Funds" contributions requirements pursuant to the Agreement and Trust Agreement governing the plaintiff Funds, which Specifies that employer’s contributions as they become due and owing each month are Fund assets." Chatwal chronically failed to make the required contributions for his hotels and restaurants, all of which then accrued huge debts and ultimately declared bankruptcy.

Complaint Claims Chatwal Still in Control

Unexpectedly in this disclosure, the Hotel Council charges that the Sheffield Hotel, which used to be known as the Ambassador Hotel, is still in operation under the control of defendant Chatwal. Furthermore, it alleges that Chatwal still has involvement with the Travelodge, which was formerly known as the Chatwal Inn on 45th Street and controls the Quality Hotels and Suites Manhattan, previously known as Chatwal Inn at 47th Street.

Charged With Embezzlement and Rico Conspiracy

And it asserts that "Chatwal’s repeated failures to remit the Funds’ Contributions was done intentionally for the fraudulent and malicious purpose of diverting Fund assets for his own personal use" which makes him guilty of embezzlement in violation of federal laws. It further accuses Chatwal of willfully engaging in a conspiracy to convert Funds’ assets for his own gain and the gain of his co- conspirators. Moreover, the Hotel Council categorically states that, "Chatwal’s continuous, ongoing scheme to gain the benefit of a labor force without paying the required Fund’s contributions and then hiding behind bankruptcy laws to avoid payment is a violation of the Racketeer Influenced and Corrupt Organization Act (RICO).

Hotel Council Wanted Treble Damages

After all was said and done, the Hotel Council claimed approximately $1.13 million in damages, fees, and costs along with as much as treble damages in penalties, suggesting that the total claim, with interest included, to be about $3.5 million. But then, surprise….surprise. Soon after the complained was files on February 14, 1996, the Hotel Council’s attorneys received a letter from Sant’s attorney, Robert S. Sasloff, advising then that Chatwal was in bankruptcy and, as such, he was protected from any attempts to collect against him to take possession of his property. Unimpressed, attorneys for the Hotel Council marched onto Chatwal’s bankruptcy court, repeated the charges in a new complaint, and further charged the hotelier with not even listing their debts in his bankruptcy petition schedules.

What This Means for Chatwal

So far, if both the FDIC and the Hotel Council are successful in their bankruptcy litigation against Chatwal, it will mean that he will not be able to discharge these two debts as a result of his insolvency. These debts could remain with him for the rest of his life. Additionally, if the three Indian banks are successful, it may very well translate into none of Chatwal’s debts being discharged in bankruptcy would be a fatal blow to Chatwal’s future aspirations. Finally, f the Hotel Council is able to prove that Chatwal is still in operation at the hotels and restaurants which went bankrupt; he stands to lose much more. So much for S.S. Chatwal’s rosy prediction about out of this mess in ninety days.

Source: India Monitor
Volume VI…NO.293
New York
Sunday
March 31, 1996
Part 5