A pharmaceutical executive was found guilty of fraud Monday when Miami federal jurors found that he used $100 million worth of phony receivables as collateral to obtain loans that his company failed to repay, leading to the collapse of one of Puerto Rico’s biggest banks.
Jack Kachkar, the former chairman and CEO of Inyx Inc., was found guilty of all nine counts of wire fraud stemming from his scheme to use bogus invoices to prop up the financial health of the company so that it could obtain loans from Westernbank Puerto Rico. Kachkar, 55, formerly of Key Biscayne, was also accused of embezzling millions of dollars to buy a private jet, real estate and luxury cars.
The 46-branch bank based in San Juan incurred $100 million in loan losses and was closed by regulators in 2010, when the Federal Deposit Insurance Corporation reached an agreement for Banco Popular de Puerto Rico to assume its deposits.
Inyx, a publicly traded company, began borrowing millions from Westernbank in 2005, using purported assets such as accounts receivables from its sales of medical device parts. At Kachkar’s direction, Inyx supplied fake invoices to the bank to show the company had the ability to repay the loans when it did not, according to Assistant U.S. Attorney Michael Berger. Those invoices went unpaid.
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Two years later, Westernbank declared Inyx in default for failing to repay the loans.
Kachkar’s lawyers with the federal public defender’s office argued that the invoices were “pre-billing” and “development” invoices and that Westernbank was fully aware of them and wanted Inyx’s business to broaden the bank’s loan portfolio.