Subrata Roy’s key man using bogus account to raise money?

Jailed Sahara conglomerate head Subrata Roy is seeking to refinance the group's overseas hotels including New York's Plaza to raise the Rs10,000 crore ($1.6 billion) he needs to get bail.

But the problem, according to a Reuters report, is that it is unclear if the man who's orchestrating the deal, a 34-year-old former broker named Saransh Sharma, has the money to pull it off.

Sahara's head of corporate finance, Sandeep Wadhwa, said Sahara's lawyers had verified with Bank of America that Sharma has deposited just over $1 billion in an account at the bank that is "earmarked for the said transaction."

That account, however, doesn't appear to exist. A manager at the bank told Reuters that he didn't write a crucial document attributed to him - an email, sent in his name to Sahara, which purported to verify the account's existence. After Reuters asked the bank to look into the account, spokeswoman Jumana Bauwens issued a statement saying, "Bank of America isn't involved in the transaction."

What's more, Sharma, who lives in San Jose, California, has admitted to stealing a database from a former employer. There are also two pending lawsuits against him alleging he forged a letter and produced fake documents to obtain a loan.

Bank of America's assertion that it has nothing to do with the deal, as well as details about Sharma's past, could throw a wrench into Sahara's efforts to free Roy in a case that has made headlines in India for almost a year.

Roy is being held at New Delhi's Tihar jail, the largest in India, on contempt charges for failing to comply with a court order to repay investors in a bond scheme later ruled to be illegal.

The bail amount, the largest ever in India, reflects the cost of the illegal scheme, estimated by Indian regulators to be as much as $7 billion.

A lawyer working for Sahara, speaking on the condition of anonymity, said the company's lawyers had not separately checked with Bank of America to see whether Sharma had a billion-dollar account with the bank. Instead, the lawyer said, Sahara relied on a letter from the bank saying the funds were there. Sahara declined to comment on the lawyer's assertion.

Sharma told Reuters he is backed by a group of US and UK investors for the refinancing and that the funds in the account have come from them. Both he and Sahara declined to identify the investors (See:Mirach Capital eyes Sahara hotels in $2 bn bailout for Subrata Roy).

Sharma, who spoke with Reuters on 23 January and sent a subsequent email on 26 January, said in an emailed statement on Wednesday that Mirach had faced "a number of challenges in closing this transaction" and that he wouldn't disclose "sensitive details" about the deal until it closes. 

Under the proposed deal, which Sharma said he reached with Sahara in December, Sharma's investor group would help pay off about $880 million of a Bank of China loan for the hotels. Besides the Plaza, which Sahara bought for about $570 million in 2012, the properties also include the Dream Hotel in downtown New York and the Grosvenor House in London.

Sharma and the investor group also agreed to lend $650 million to Sahara and make a $450 million investment in the conglomerate's properties in India. Sahara and Sharma have said they expect to finalize the deal by 20 February. 

It is unclear how paying off the Bank of China loan, or obtaining the loan and investment, would help Sahara pay Roy's bail and refund money to the bond investors.

Sahara told the Supreme Court last month that it is in talks with Mirach Capital, the company Sharma set up to do the deal with Sahara. Sahara has shown the court a 5 January letter from Bank of America, saying it is holding $1.05 billion in funds in an account on behalf of Mirach Capital for Sahara, according to a court filing. Sahara and Sharma declined to show Reuters a copy of the letter.

But Reuters says it has seen an email, dated 17 December, sent in the name of Nuno Marques, a Bank of America banking center manager in Wellington, Florida, to Sahara finance executive Wadhwa. In the email, the writer attests that Mirach "has sufficient liquidity with Bank of America to undertake the said transactions" with Sahara. The email does not specify the amount of funds Mirach has, but says the money would be put into escrow after anti-money laundering-related checks.