A New York court has ordered that a fraud claim brought by US asset manager BroadRiver will continue to discovery, with the company accusing a group of UAE-based defendants of fabricating receivables and impersonating real companies.
The lawsuit was initially filed in August last year by BroadRiver’s receivables finance arm, and accuses Dubai-based Sarian General Trading of defrauding it out of around US$2.3mn across four transactions.
One of the defendants filed a motion to dismiss all seven causes of action submitted by BroadRiver, but the New York Supreme Court partially rejected that motion on August 15, meaning the case is set to move onto discovery.
BroadRiver alleges in the lawsuit that the scheme was orchestrated by employees of Sarian, as well as individuals Aditya Trivedi, described as a consultant acting for Sarian, and Kashif Khan and Saalim Khan, who are described as brokers.
The lawsuit alleges that the group of defendants provided emails and trade documents seemingly showing sales of goods to two buyers, Howell Metal Company (Howell) and Owen Electric Steel Company of South Carolina (Owen).
BroadRiver agreed to purchase the receivables generated under a financing agreement, but once repayment was due from Sarian, it says it received only a tiny percentage of the funds owed.
It alleges that upon investigation, it discovered that some of the email addresses that had provided documentation were not attached to genuine Howell or Owen web domains.
Trivedi filed a motion to dismiss proceedings in June, arguing he is not subject to US court jurisdiction, but the court ruled last month that four of the seven causes of action brought by BroadRiver will proceed.
Those causes include fraudulent misrepresentation against Trivedi and the Sarian representatives, aiding and abetting fraud against Kashif Khan and Saalim Khan, and negligent misrepresentation against Sarian.
Trivedi has yet to file a defence but denies the allegations.
Sarian and its representatives, as well as Kashif Khan and Saalim Khan, have yet to file a response and did not comment when contacted.
The alleged fraud
BroadRiver’s claim dates back to mid-2022, when it was approached with a receivables financing opportunity through a string of brokers and intermediaries, some of which are not named as parties in the case.
Its lawsuit says that brokers provided financial audit documents and ownership details for Sarian showing a long history of trading activity, and said the trader had identified Howell and Owen as willing buyers of metals.
Sarian forwarded an email to BroadRiver, seemingly from a manager within Howell’s accounts payable department, stating the company would execute irrevocable payment undertakings (IPUs) to underpin the sale of receivables, the filing says.
It says defendants continued to provide documents to the lender’s representatives, including invoices, shipping documents appearing to show an actual movement of goods, and details of cargo inspection arrangements.
Comfortable with the documents presented, and with the security of an IPU, BroadRiver agreed to purchase two receivables for sales of copper cathodes to Howell and wired the purchase price directly to the trader, it says.
It then undertook two similar transactions relating to purported sales to Owen, with defendants again providing invoices, shipping documents and the promise of an IPU, the claim says.
But when repayment became due under the receivables purchase agreements, BroadRiver says it received only a fraction of the funds due in relation to the sales to Howell, and none in relation to Owen.
BroadRiver says Sarian and its brokers then stopped returning calls and emails.
At that point, BroadRiver discovered there was no individual working at Howell by the name it had been given, and that the domain on his email address did not match that of Howell’s website, it alleges.
Although the name of the Owen employee matched someone at the company, the email address did not correspond to Owen’s registered web domain, it says.
BroadRiver further alleges that in early 2023, it contacted an in-house lawyer at Howell’s parent company, who confirmed the company had no trading history with Sarian.
The lawyer said the company was aware of “a nearly identical fraud” attempted around the same time by another UAE-based metal trading company, it claims.
BroadRiver’s claim also cites an email received from the address of Sarian chief executive Ajay Kumar, sent before the receivables purchase agreement was executed, which was signed “Aditya” and not “Ajay”.
This, BroadRiver alleges, “indicat[es] that Trivedi is the same person as Kumar or is closely associated with Kumar”.
Defendants deny claims
Trivedi has not yet submitted a defence to BroadRiver’s complaint, but filed a motion to dismiss the case in June this year.
Trivedi argues that because he is located outside US territory and does not conduct business from the country, the court does not have jurisdiction over him.
BroadRiver’s lawsuit says the US court does have jurisdiction over Trivedi because he is co-founder and chief executive of US inventory finance company TradeBacked. Its claim includes a regulatory filing from TradeBacked saying it is registered in Delaware and has its main office in Florida.
However, Trivedi’s motion to dismiss says the Florida address is a virtual office with no employees present, and that he has conducted TradeBacked’s business exclusively from Dubai.
His court filing also disputes that he and Sarian’s Kumar are the same individual.
He says Kumar had contacted him in mid-2022, initially to seek a line of credit from TradeBacked. Because TradeBacked predominantly offers inventory finance, Trivedi says he introduced Kumar to Kashif Khan.
His filing says Kashif Khan had been a business connection since 2015, and that he had historically provided consultancy services to Khan’s Dubai-based company, FirstTrade Global.
Kashif Khan is one of several individuals involved in the transaction that know Kumar and Trivedi are not the same person, he says.
When contacted by GTR, Trivedi’s legal representatives provided a statement on his behalf describing BroadRiver’s claims as “baseless and utterly misplaced”.
“BR Trade’s [BroadRiver] allegations against Mr Trivedi rest on the ludicrous claim that Mr Trivedi lives a double life as the CEO of Sarian,” the statement says.
“BR Trade knows this allegation is false and is currently pursuing its claims against Sarian and its principals in Dubai. BR Trade should avail itself of available remedies against its contracting parties, including its broker, instead of Mr Trivedi, who has nothing to do with Sarian.
“Mr Trivedi intends to vigorously defend against BR Trade’s erroneous claims and looks forward to clearing his name.”
Court documents filed last month show Trivedi intends to bring several affirmative defences, including that BroadRiver has failed to state a claim, has a lack of standing to assert fraud claims, that damages were caused by its own conduct or lack of due care, and that damages cannot be claimed if they could have been mitigated with reasonable efforts.
BroadRiver has also brought separate proceedings in Dubai. The company declined to comment when contacted by GTR.
Sarian and Kashif Khan did not respond when contacted, and Saalim Khan could not be reached.
