Former Indian-American CEO of Essex Holdings Inc. sentenced to 15 years in prison for $33 million ponzi scheme

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The former Chief Executive Officer of Essex Holdings, Inc., was sentenced to 15 years in prison by United States District Judge Darrin P. Gayles in Miami, in connection with two separate fraud schemes totaling more than $33 million in fraudulently obtained funds.

Navin Shankar Subramaniam Xavier, a/k/a “Navin Xavier,” a/k/a “Dr. Navin Xavier” (Xavier), 44, of Miramar, was convicted by guilty plea on January 13, of two counts of wire fraud. One wire fraud count pertained to the investment fraud scheme and the other count pertained to the South Carolina economic development scheme. A restitution hearing is scheduled for July 14, before Judge Gayles, a May 17, according to a May 17 press release from the U.S. Attorney’s Office for the Southern District of Florida.

The first scheme involved nearly 100 investors who purchased $30 million of promissory notes purported secured by interests in iron ore mining in Chile. The second scheme involved unlawfully obtaining $1.2 million in economic development funds as well as valuable industrial property from the State of South Carolina.

According to documents filed in court, from September 2010 through May 2014, Xavier operated Essex Holdings, Inc. (“Essex Holdings”) from an office in Miami Gardens, and raised more than $30 million from nearly 100 investors for supposed investments in sugar transportation and shipping, as well as iron ore mining in Chile.

Prosecutors said Xavier used a false financial statement, forged documents, and false promises of fixed rates of return, to induce investors to invest with Essex Holdings.

He used most of the money for purposes other than what was promised, including to support lavish spending on expensive jewelry, luxury vehicles, wedding expenses, and cosmetic surgery, by Xavier and his wife, the press release says.

Eventually, Xavier used new investor money to pay old investors in a Ponzi-like fashion before the scheme collapsed. Evidence filed in court showed that actual investor losses from the scheme exceeded $29 million, according to the charges filed.

The second scheme involved Xavier using Essex Holdings to obtain $1.2 million in payments and approximately $1.5 million worth of commercial real estate from the South Carolina Coordinating Council for Economic Development (“SCCCED”), a division of the South Carolina state government, that was supposed to be used to develop a dilapidated industrial property into a diaper plant and rice packaging facility.

According to documents filed in court, Xavier provided false financial documentation to SCCCED to get the contract, and later provided fake contractor invoices and fake bank statements to get paid under the contract.

As with the investment fraud scheme, Xavier spent a significant portion of the development money for his personal living expenses, and wired some of it to the same overseas accounts used in the investment fraud.