US court freezes bank accounts of Axact-owned shell companies

Effort to recover Rs2.30 bn fine

ISLAMABAD: An American court has frozen the bank accounts of US-based shell companies owned by Axact for recovering the Rs2.30 billion fine it imposed in 2012 for issuing fake degrees to 30,000 students in one US state (Michigan) alone, thus confirming the company’s fake degrees and offshore businesses.

While the websites (Belford High School and Belford University) declared fake by the District Court of Michigan were represented by an employee of Axact during the trial, a fact he later also admitted during a statement before the Karachi-based court, there is also sufficient evidence to establish the ownership of the shell companies by Axact’s top management.

Not only were the students trapped into obtaining fake degrees forcing them into filing a lawsuit, but the Axact management had also fooled the Michigan court. A video statement was recorded from Axact’s Karachi office through the company’s peon, Saleem Qureshi, who was portrayed as a defendant in the lawsuit against these websites.

However, he was under instruction to only keep his lips in motion by uttering 1,2,3,4 in silence whereas a person standing next to him was recording the statement without raising suspicion in the minds of the American judge and plaintiffthat another fraud was being committed, Qurehsi’s confessional statement before a Karachi court reveals. 

As efforts are on to recover the fine imposed by the court for defrauding students, the shell companies of Axact have been traced and their bank accounts frozen.Three offshore companies namely Tinko, Tullow and Mivvel were incorporated in Delaware, an American state and tax haven, a popular destination for parking ill-gotten money as the state laws protect privacy of beneficial owners of the companies whose identity is only disclosed if demanded by the US law enforcement agencies.

The shell companies under question were into the business of payment processing and have their accounts in Citibank. “Citibank received the attached garnishment order from a court to freeze/remove funds in your accounts. The amount of the garnishment order was for $22,910,290.59. We are sending you this notice to let you know what we have done in response to the garnishment order,” read the bank’s letter separately issued to three Axact-owned companies on February 5, 2016, the copy of which is available with The News.

The letter then explains what a garnishment order is. “A garnishment order is a writ, order, summons, judgment, levy or a similar written instructions issued by a court, a state or a state agency, a municipality or municipal corporation, or a state child support enforcement agency including a lien arising by operation of law for overdue child support or an order to freeze the assets in an account to effect a garnishment against a debtor,” reads the letter issued by the bank’s legal department.

Although, the lawyer of these companies, Todd A. Holleman, insists his clients are not “in possession of funds owned by the judgment debtors,” the plaintiff in the case submitted undeniable evidence linking the fake websites with the owners of the shell companies.

The Michigan court handed the first verdict on August 21, 2012 declaring the degree-awarding websites (Belford High School and Belford University) fake and imposed the fine of $22,783,500 against the defendant, Salim Qureshi, who happened to be a peon of Axact and appeared as defendant in the lawsuit on the calling of top management through a video link without knowing the background as he told a court in Karachi.

As the fine was not paid and The New York Times’ story unearthed the real face behind the case in 2015, the plaintiff (30,000 degree/diploma holders of these websites) issued requests for the freezing of shell companies account only after obtaining documents to establish their connection with fake-degree operations.

Meanwhile, the interest ($118,702.04) accrued on the principal fine amount, post-judgment cost ($8,088.55) escalated the total payable fine to $22,910,290.50 for which the accounts have been frozen, reads the court notice sent to the Citibank on December 21, 2015.

As for as the defendant, Saleem Qureshi, in this fake website case is concerned, he admitted during the FIA’s investigation and then volunteered recording a statement before a court in Karachi. Peon by job, his name was spelled before the US court as Salim Kureshi.

“I was directed by Viqas Atique, COO of Axact, to move lips silently while reading 1,2,3,4 in Urdu in front of the camera installed for recording the statement without letting me know the purpose,” Qurehsi told the court.

As the video conference for recording statement before the Michigan court started, Viqas and Shoaib Sheikh were sitting behind me, he said. “I was only moving my lips silently reading 1, 2, 3, 4. Behind the computer, Viqas Atique was preparing replies on a paper sheet and Umair Hamid was directed to read the same in Urdu being the replies of queries of the judge of the American court. This episode lasted for about three hours and then Umair Hamid and I were directed to go out,” reads his statement that is available with The News.

When the Axact scam was flashed by the media, he further recorded, Umair Hamid came to me and conveyed the message of Viqas Atique to go into hiding and gave me Rs25,000 for the purpose. “I went to my native town, Jhelum, to avoid any inconvenience,” he said.