Jack Kachkar ruined his pharmaceutical company along with one of Puerto Rico’s biggest banks — all “to live an uber-lavish lifestyle far beyond his legitimate means,” prosecutors say.
Now, the 56-year-old former Key Biscayne executive — convicted of financial fraud — will likely spend the rest of his life in prison after being sentenced to 30 years by a Miami federal judge on Tuesday.
U.S. District Judge Donald Graham also ordered Kachkar to pay $103.5 million in restitution to Westernbank, the Puerto Rico institution that collapsed as a result of his loan scam.
During his two-day sentencing hearing, the U.S. Attorney’s Office argued that Kachkar should be punished within the sentencing guidelines for his offense, or 30 years to life. Lawyers with the Federal Public Defender’s Office countered that he deserved a sentence “substantially below” that range, noting the “enormous shame” that the criminal case and related civil litigation have brought to him and his family.
In February, federal jurors in Miami found that Kachkar used $100 million worth of phony receivables as collateral to obtain loans that his pharmaceutical company, Inyx Inc., failed to repay. Kachkar, the former chairman and CEO of Inyx, was found guilty of numerous wire fraud charges 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.
Kachkar was also accused of embezzling tens of millions of dollars to buy a private jet, high-end real estate, fancy cars and expensive jewelry.
“To accomplish this, the defendant misled his own people,” Assistant U.S. Attorney Michael Berger said in court papers. “The defendant prolonged his fraud scheme and delayed its discovery by repeatedly lying or directing lies to Westernbank executives about purported and imminent repayments from other [foreign] lenders in order to lull Westernbank into continuing to lend money to Inyx.”
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 Berger. Those invoices went unpaid.
Two years later, Westernbank declared Inyx in default for failing to repay the loans.
The 46-branch Westernbank, based in San Juan, incurred more than $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.
Westernbank’s 1,500 employees also lost their jobs.