Bruce unsuccessfully prosecutes Kamdar; but successfully ruins his life

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By Frank Parlato;

THE STATE CONTRACT FROM HELL

Last week we began the story of Bhavesh H. Kamdar, a civil engineer from western India.
This week we continue the story.                                                                                             Kamdar came to America in 1988, at age 22, settled in western New York, met his wife, Panna, and, in 1996, they had a son. He mistakenly thought he would pursue the American Dream.
After working for other companies for a time, he started Industrial Site Services, Inc. (ISS), and, in Dec. 1997, his company won its first (and last) state contract, to remove and remediate underground petroleum tanks on New York State property in western New York. Thus began Kamdar’s American Nightmare.
New York State was under a mandate to clean up old petroleum pumps and Kamdar’s bid was nearly a million dollars lower than the next lowest bidder. It should have worked out well.
But, a simple line item on his $4.9 million bid would lead Kamdar to disaster. It was a $500,000 “guarantee fee” – the cost, he claimed, for getting a bond to insure New York State against loss in the event ISS defaulted on the contract.
This “guarantee fee” and especially Kamdar’s subsequent use of the word ‘collateral’, was the genesis of his nine years of legal sorrow.

After winning the bid, the contract administration director for the New York State Office of General Services (OGS), Robert E. Kainz, questioned Kamdar about the “guarantee fee”.
The smallness of his company allowed Kamdar to bid almost one million dollars lower, but “[The] only way a company like mine can obtain a bond … is directly due to the fact that I put up my life savings to secure it,” Kamdar explained.

Kainz wanted proof. Kamdar faxed him an invoice for $434,765 to be paid by ISS to Kamdar and his wife for guaranteeing the performance bond with AIG Insurance.
Kainz wanted details. Kamdar sent him ISS corporate minutes wherein it was resolved that ISS would pay Kamdar and Panna $434,765 based on the $4.9 million state contract in return for providing “the required individual guarantees, and pledge their personal collateral.”

Kainz wanted the guarantee to AIG and a description of the collateral. Kamdar faxed a copy of the “General Indemnity Agreement” wherein it states that he and his wife “assign, transfer and set over” every asset they own to AIG as “collateral.” If ISS failed to perform the work, AIG would complete it, and take Kamdar and his wife’s assets.

Kainz proposed Kamdar give the state a discount. Instead of $500,000, Kamdar’s company could get a ‘guarantee fee’ of 9.52% “not to exceed $402,000.”
The contract included the 9.52%, but the state neglected to include the $402,000 cap.
Under pressure to meet its mandate deadlines, the state added to the tank removal and remediation work ISS performed. The contract grew beyond the initial $4.9 million. As per their contract, when ISS sent an invoice, it added the 9.52% guarantee fee.

As ISS work expanded, the state’s construction manager, Martin DePaolo, realized that ISS had been paid more in guarantee fees than what he thought was the cap of $402,000.

DePaolo sent an email to Kainz. After an internal investigation, conducted by John D. Lewycyi, the assistant director for contract administration, Kainz determined the contract did not cap the 9.52% fee. Besides the work needed to be done and ISS completed its work ahead of schedule. Gov. George Pataki was among those who praised Kamdar.

By October 2000, ISS had been paid $12.9 million under the contract. With the 9.52%, Kamdar earned $1,114,626 in guarantee fees. Yet because of the low-price ISS bid, even with the guarantee fee, the state of New York saved about $3 million compared with the next lowest bidder.
Sometime shortly after, the New York State Office of the Inspector General conducted an audit and discovered that ISS was paid $1,114,626 for ’guarantee fees.’

Kainz was questioned. He neglected to tell the inspectors that his department failed to put a cap in the contract. Based on Kainz’s statements, ISS had been overpaid $712,000.
Kainz recommended Kamdar return $712,000 to New York State. If he didn’t, he would be removed from the state’s approved list of bidders. Kamdar refused. If the state had forgotten to put in a cap, that wasn’t his problem, he had lived up to the contract.

TURNING A CONTRACT INTO A CRIME

Former Assistant US Attorney Anthony M. Bruce wanted Bhavesh Kamdar in prison. He told the judge "he won in the state court proceeding; it gives him hope... and I intend to dash that hope."
Former Assistant US Attorney Anthony M. Bruce wanted Bhavesh Kamdar in prison. He told Magistrate Judge Jeremiah McCarthy that Kamdar “won in the state court proceeding; it gives him hope… and I intend to dash that hope.”

In March of 2001, the New York State Office of the Inspector General referred the matter to the US Attorney for the Western District of New York. Enter Assistant US Attorney Anthony M. Bruce.

Kamdar, now 35, as he planned to return to India, learned that FBI agents had visited AIG offices seeking information; there was an active FBI investigation into ISS. Kamdar decided to go ahead with his plans. On May 29, 2001, with his wife and son, he left America.

The investigation went on. Bruce formed a criminal theory: Kamdar defrauded OGS by lying that he had to post collateral and therefore deceived the state into paying the 9.52% guarantee fee. Each mailing by Kamdar requesting the fee was an act of mail fraud. Each time he deposited a check that included the fee, he engaged in money laundering.
From February 2002 to April, 2004, Bruce presented evidence to three different grand juries He brought in Kainz, but did not question him about the General Indemnity Contract.
Despite the fact that there was an active grand jury that had heard live testimony from at least four witnesses, Bruce preferred a fourth grand jury, which heard only the testimony of a federal agent who summarized the evidence, to seek a true bill. On June 30, 2004, Kamdar, who had been in India for more than three years, was indicted on 20 counts of mail fraud and 10 counts of money laundering.
Kamdar chose not to appear before the US District Court to respond to the criminal charges against him. A US arrest warrant was issued against him on July 16, 2004.

Kamdar chose not to appear before the US District Court to respond to the criminal charges against him. A US arrest warrant was issued against him on July 16, 2004.

INTERPOL, EPA AND BRUCE SHOW KAMDAR HE CAN’T HIDE OR COULD HE?

In addition to the federal indictment, in August 2004, the New York State Attorney General commenced a civil lawsuit against Kamdar. So now Kamdar was facing two lawsuits – one criminal and one civil, one state, one federal, for the same alleged offense.
In his civil deposition, conducted via video from India, Kamdar explained he intended no fraud. He had told Kainz that he and his wife pledged collateral to guarantee the bond and in his company paid them 9.52% as a guarantee fee. Kamdar had given Kainz the General Indemnity Agreement that showed the collateral. Nothing was hidden.
Meantime, the U.S. Environmental Protection Agency, Criminal Division, put Kamdar on its “Most Wanted” list, which contained the names, vital stats and pictures of people who were “on the run from justice” for alleged environmental crimes like smuggling pollutants or illegally dumping them.
Kamdar was never accused of an environmental crime, but for allegedly cheating New York State over fees in a contract. But a red corner notice was issued by Interpol seeking his arrest. In August, 2006, local police, on a request from India’s Central Bureau of Intelligence, arrested Kamdar at his residence at Rajkot. Kamdar was held for 79 days in an Indian prison while the US Government attempted to obtain permission from the Ministry of External Affairs of India to extradite him. A judge from the high court was appointed to hear the case in Delhi, and freed him on bail. With his fate in America and India uncertain, his marriage fell apart and he and his wife divorced.

The EPA Environmental Crimes most-wanted poster for Bhavesh Kamdar who was never charged with any environmental crimes.
The EPA Environmental Crimes Wanted poster for Bhavesh Kamdar. Curiously, Kamdar was never charged with any environmental crimes.

THE SOVEREIGN VICTIM STATES IT’S NOT A VICTIM

In the fall of 2007, the civil lawsuit proceeded with a non-jury trial before State Supreme Court Justice Joseph C. Teresi in Albany. Kamdar did not appear.
Bruce filed an affidavit opposing a defense motion to dismiss the case in which he stated, “the allegations contained in the State’s civil action against Kamdar are identical to those contained in a criminal indictment that the United States Attorney… has obtained against Kamdar.”                      At trial, the state claimed Kamdar’s misrepresentations came when he said he and his wife pledged their assets as collateral to obtain the AIG bond, while AIG never required Kamdar to post collateral, and that he wrongfully took guarantee fees over the cap of $402,000.
Kainz was a key witness. Under cross examination by Kamdar’s attorney, Joseph Sedita of Hodgson Russ, Kainz admitted he was aware that the AIG guarantee was not based on Kamdar’s collateral being held by AIG, but on the risk of loss of Kamdar and his wife’s assets. He and other state officials admitted that the $402,000 cap was not in the contract.

teresi
State Supreme Court Justice Teresi ruled Kamdar was guilty of fraud.
spain-edward
NYS Justice Edward O. Spain wrote for the Appellate Division, 3rd Department; that Bhavesh Kamdar was ‘not guilty.’

Justice Teresi found against Kamdar and awarded a judgment to the state for $1,114,626 plus costs on October 23, 2007.
Kamdar appealed and the New York State Appellate Division, 3rd Department released a decision on June 26, 2008. Justice Edward O. Spain wrote (with Justices John A. Lahtinen, Kane, Malone and Leslie Stein concurring) that New York State officials “should have been aware that the expense for which Kamdar demanded reimbursement was not physical collateral, but the risk to which he and his wife, and their personal assets, were exposed as a result of the personal guarantee which they provided [AIG]… Significantly, when plaintiff pressed Kamdar for a description of the collateral… Kamdar [sent a copy] of the… General Indemnity Agreement, which clearly required personal guarantees of the indemnitors, but no physical collateral….
“We have… considered the undisputed fact that defendants fully performed under the contract at a cost which was nearly a million dollars less than the next lowest bidder, representing – once the contract amount was tripled by change orders – a savings to the taxpayers of approximately three million dollars…” The justices also determined that the guarantee fee was enforceable and there was no “cap”. The judgment against Kamdar was reversed.

The sovereign “victim,” acting through its Attorney General, fully prosecuted the specified fraud allegations in its civil case against Kamdar. That same sovereign, acting through its judiciary, determined that all claims of fraud and breach of contract failed at trial and dismissed the complaint against Kamdar.
If the alleged victim, the State of New York, determined that Kamdar was guilty of neither breach of contract nor fraud, should this not have put an end to the federal Indictment?
Bruce didn’t think so. He pressed for extradition and at the same time negotiated with Sedita and reached an agreement. Kamdar would return. Bruce warned Sedita that he would move for detention when Kamdar arrived.
This serves his purpose: A man in jail is severely hampered in his defense for he cannot easily meet with his attorney who must come to the jailhouse, sometimes at a distance, must go through security, and see his client in a confined room. The defendant cannot easily get documents, make phone calls, meet witnesses, use a computer, email, or earn money to pay for his defense. The detained defendant is demoralized, sequestered from friends and family and more likely to accept a plea deal. A detained defendant, although technically innocent, is already experiencing the punishment meted out to the guilty. It reeks of the imprimatur of guilt. A detained defendant has far less chance of acquittal.

KAMDAR RETURNS

On February 18, 2009, Kamdar returned to the US where he was arrested in Brooklyn by EPA agents. He was taken before Magistrate Judge Victor Pohorelsky, who released him on his own recognizance, ordering him to surrender his passport – and for further proceedings. Before leaving Brooklyn, Kamdar was processed and was interviewed by an officer of the U.S. Probation and Pretrial Services, Amina Adossa Ali, who recommended Kamdar be given “moderate bail”.
Kamdar flew to Buffalo. Before Magistrate Judge Jeremiah McCarthy, Bruce said he believed Kamdar was a flight risk and wanted him locked up. Sedita argued, “How in the name of logic can there be a claim that there is a risk of flight… when he … returned to the United States voluntarily at his own expense in order to face charges?”
“He is back here,” Bruce rebutted, “because… he won in the state court proceeding; it gives him hope… What happens down the road if that hope becomes dashed? … and I intend to dash that hope.”
A detention hearing was set for the following Monday before Magistrate Judge Hugh B. Scott. Bruce told Sedita, “[I]f Judge Scott does not detain, there will be an appeal to Judge Arcara.”
If all went well, Kamdar would never see freedom from Monday onward until he was a very old man. In furtherance of this plan and in defiance of the rules, Bruce brought the pre-trial report recommending moderate bail – which was not to be taken from the offices of Probation and Pretrial Services – home for the weekend.

TAMPERING WITH EVIDENCE?

The EPA Environmental Crimes most-wanted poster for Bhavesh Kamdar who was never charged with any environmental crimes.
Magistrate Judge Hugh Scott had an unwelcome surprise in his courtroom when AUSA Anthony Bruce came in with an altered Pre-trial report. Judge Scott was not pleased.

On Monday morning, February 23, prior to the detention hearing, Bruce handed to Sedita the pre-trial report and it had changed over the weekend. It now recommended “no bail”. Bruce told Sedita that this was the official pre-trial report before the judge.
Kamdar had a copy of Adossa Ali’s original pre-trial report.
When Magistrate Judge Hugh B. Scott called court into session, Sedita went before him: “Your Honor, the document has been tampered with.”
MAGISTRATE JUDGE SCOTT: Tampered with?
SEDITA: …the first page of this … states that it is respectfully recommended that the defendant be detained (no bail) pending the resolution of the (case). Going to the next page, your Honor, we see the commencement of the actual pretrial services agency report from the Eastern District of New York.
MJ SCOTT: All right.
SEDITA: …Your Honor, please turn to the second last page and the last page of the document… The second last page ends with an assessment of danger. The following factors indicate the defendant ‘poses a danger to the community,’ ‘unidentified.’ The last case bears the signature of Amina Adossa-Ali and the date February 18th, 2009, the date that he came into New York, surrendered and was processed.
MJ SCOTT: Okay.
Sedita gave the judge the original unaltered pre-trial report.
SEDITA: I’m going to ask this be marked as a court exhibit, your Honor. It is the bail report from the United States Pretrial Services Agency signed by Amina Adossa-Ali on the 18th of this month… I… direct the Court’s attention to the last two pages. The Court will note that there is a recommendation on the last page for ‘moderate bond’ made by Amina Adossa-Ali, the investigating officer before whom the defendant appeared in New York City…”
MJ SCOTT: Yeah, it’s different.
SEDITA: …it has been tampered with… the one that has been given to you, your Honor, it bears the signature block of Miss Amina Adossa-Ali and the (bail) recommendation has clearly been whited out.
Bruce tried to explain. “First of all, it hasn’t been tampered with… There is a lot of background here and a lot of it I think Mr. Sedita and I disagree about it, although I thought we had an agreement coming in.”
MJ SCOTT: I’m not really concerned about any of that, I’m concerned about why I’m looking at two different documents with two different prints on it, that is all I want to hear about right now.
Bruce admitted he took the altered pre-trial report home.
BRUCE: I know that under ordinary circumstances, I’m required to turn these back to the Probation Department… By accident I took this with me. I’ve had it with me all weekend, trust me, I haven’t fiddled around with it.
MJ SCOTT: Why is this document different from the one that is given to this Court as an official copy of a document from the Eastern District of New York and… leaves out the recommendation… How did that happen?… This is serious business… I want to know why this has been whited out on the copy that was given to the Court. Where did that happen? Who did it? And give me a reason why it was done.
“The government is not trying to hide anything from the Court,” Bruce said.
MJ SCOTT: Do you all do this routinely? Should I know when I see a report… it may not really be the report… Should I ask you ‘is this the whole report?’… [T]here are two reports, one that’s been redacted and one that hasn’t… [C]ertainly what’s not normal is we go from a recommendation of ‘let him go on a bond’ and then, same department, part of the court, recommends ‘detention’.”

Everyone in the courtroom was in suspense. Some were standing. Magistrate Judge Scott directed everyone to sit down. Sedita introduced his co-counsel, Reena Dutta.
Magistrate Judge Scott recused himself and explained. “I’m quite curious about the change in these documents, but given the situation where my wife is clearly a friend of (Dutta’s) mother… I am going to have to recuse, and I am sorry I have to do that because I’m still curious about what happened here.”
That evening, Acting-US Attorney Kathleen M. Mehltretter contacted Sedita and offered to drop the motion for detention and allow Kamdar to post bail, in return for Sedita not pursuing Bruce’s possible forging of a document. In the interest of his client’s freedom, Sedita accepted the deal. Kamdar posted bail.

 

Attorney Joseph Sedita successfully defended Bhavesh Kamdar in state and federal court.
Joseph V. Sedita lost in state supreme court but won on appeal. In federal court the jury deadlocked, but Sedita won on a motion to dismiss which cleared Kamdar of all 30 counts in his indictment.”

THE TRIAL OF BHAVESH KAMDAR

monica wallacve
Monica Wallace was US District Judge Richard Arcara’s law clerk. According Kamdar, she expressed concerns to AUSA Bruce. Wallace became a NYS Assembly Member (143 District.)

Kamdar told Artvoice that the prosecution and the defense had a meeting with Judge Arcara’s law clerk, Monica Wallace, before starting trial.
Kamdar said, “Monica Wallace drew a big circle on a paper and inside she drew a smaller circle. On the fuller circle she wrote ‘performance bond’ and the smaller circle ‘guarantee’. Then she asked Mr. Bruce, ‘You’re willing to pay for the bond, but you’re not willing to pay for the guarantee fee, how is that possible? We’re spending taxpayers’ money on this case. Judge Arcara is very sensitive to that. What are you going to do?’ and Bruce responded ‘I’m going to take my chances.'”
Trial commenced on September 23, 2009 and lasted four weeks.

Bruce called more than a dozen witnesses from the State’s Deputy Commissioner, to a lawyer from the Office of State Comptroller, to a bookkeeper who once worked for Kamdar years ago. Before calling his star witness, Bruce coached Kainz for five hours and Kainz testified that it was now his understanding that Kamdar was required to post collateral, which he failed to do.
But other witnesses could not agree on what the definition of collateral was.
The Chief of State Expenditures, OSC., Wayne Stickler testified that “collateral is just the segregation of money that’s set aside.” AIG’s Robert Staples testified that collateral was “cash or a bank letter of credit that has been taken in support of contracts.”
Bonding agent William Faust said “contractors view personal indemnity as collateral.”
Bruce did not like that answer but Faust added that Kamdar’s indemnity agreement “implicitly” provided for collateral because AIG had the right to demand Kamdar’s assets as collateral in the event of default.
Bruce tried to stop him. Faust went on: Kamdar and his wife were required to provide AIG with a detailed financial statement specifying all of their existing assets and liabilities; there was a “handshake deal” that Kamdar would not deplete his assets, and that was collateral.
Bruce called Faust a “shameless cheerleader” in open court.
Bruce called Greg Photiadis, a premier commercial lawyer in Buffalo, who was Kamdar’s former corporate attorney. Photiadis hurt the prosecution’s case when he testified that “Indemnity agreements themselves are considered collateral by bonding companies” and it is not legally necessary to have physical possession of cash to have a security interest in it. In his experience as a commercial lawyer, bonding companies “very seldom actually take physical possession of whatever the collateral is” and contractors often mistake a guaranty as a pledge of collateral; the word “collateral” being understood differently by different people.
When the prosecution rested, the defense moved for judgment of acquittal. Judge Arcara reserved and permitted the defense to put on its case.
During the trial, Judge Arcara observed that the General Indemnity Agreement contained a U.C.C. provision which supported the defendant’s contention that the agreement was a secured interest in property and, therefore, satisfied the definition of collateral.
During closing, based on Judge Arcara’s observation, Bruce shifted his argument he maintained for years that Kamdar’s fraud was the claim that he offered AIG “collateral.” Now Bruce said Kamdar’s lie was his representation that he would “lose use of his personal assets.”
The jury retired to deliberate. Ten jurors were for conviction. But two had understood the law and the facts. They weren’t going to let a man go to prison when he had done nothing wrong. After six days, tensions grew to the point reportedly of a threat of violence. Finally, they went to the judge and said they were deadlocked, a hung jury. Judge Arcara declared a mistrial and that he would now consider the defense’s motion for dismissal.

 

US District Court Judge Richard Arcara dismissed the indictment against Bhavesh Kamdar, ending nine years of cruel misery for Kamdar.
US District Court Judge Richard Arcara dismissed the indictment against Bhavesh Kamdar, ending nine years of cruel misery for Kamdar.

JUDGE ARCARA’S DECISION

On September 1, 2010, Judge Arcara ruled the indictment must be dismissed.
“All of the evidence indicated that, when asked to identify what collateral he was referring to, the defendant repeatedly referenced his personal guaranty,” Judge Arcara wrote. “… It appears that OGS misunderstood the defendant’s reference to his pledge of collateral to mean that he had physically delivered some additional property to AIG… The defendant only claimed to have ‘pledged’ his assets as collateral, and to ‘pledge’ means ‘to promise something as security for a debt.’… It is not difficult to imagine that a contractor who signs a full and unconditional guaranty putting all of his existing and future-acquired assets at risk would view that document as a pledge of personal collateral, legal accuracies notwithstanding… If OGS representatives mistakenly understood his statements to mean that there was some additional security agreement beyond what was stated in the guaranty, they should have insisted on seeing that document… the AIG letter provided with this correspondence made clear that all AIG was requiring from the Kamdars were personal guarantees, nothing else…
“The Court finds that the defendant disclosed all of the facts that were material and relevant to the value of the transaction… no reasonable juror who understood… the transaction here could find the absence of a pledge of personal collateral was material to the State’s decision to pay the guarantee fee. Accordingly, judgment of acquittal as to all of the mail fraud counts is warranted… (Consequently)… all of the money laundering counts must also be dismissed…the Court… dismisses the indictment in its entirety.”

FREEDOM

Bhavesh H. Kamdar was fee. He spent more than $1 million in legal fees in India and America and nine years of his life were spent in sighs.
Proud Bruce, with the cold untroubled heart of stone, he spent millions too – of taxpayer’s money on a case that should never have been indicted, let alone tried.
But his victim was a man too. There is no harm in patience, and no profit in lamentation. Bhavesh Kamdar said of the reckless man: “Anthony Bruce will get what he paid for, for what he did to others. All will get their justice one day. He will get the same done to him one of these days.”
Kamdar is 50. He is single, working as an engineer in India. His son, 21, grew up with a father living with grief and shocks. His mother and father divorced when he was young.
Life goes on, and everyone you meet is fighting a harder battle.

 

Read US District Court Judge Richard Arcara’s decision and order dismissing the complaint against Bhavesh Kamdar.

https://casetext.com/case/us-v-kamdar#!

New York State Appellate Division, Third Department dismissal of the complaint against Kamdar.

http://www.courts.state.ny.us/Reporter/3dseries/2008/2008_05858.htm

Sedita’s motion to dismiss

2009 03 motion to dismiss kamdar

AUSA Bruce’s affidavit.

bruce affidabit

Sedita’s motion for grand jury minutes:

motiion for grsnd jury minuted

Transcript of hearing where Bruce submits altered pre-trial report.

Transcipt of detention hearing with tampered pre trial

 

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