Biz owner flees to India amid investigation;Court issues warrant for surapaneni's arrest.(News)
An arrest warrant has been issued by U.S. District Court for the owner of a Southfield company who has fled to India. The court issued the warrant Oct. 8 after learning that Subhakar ''Sam'' Surapaneni, owner of Zaconta Inc. and 12 companies under its umbrella, had left the country Sept. 30. The warrant alleges that Surapaneni formed many of the companies to hide financial information from a court-ordered monitor. Not that Surapaneni has dropped completely out of sight.
On Nov. 8, Surapaneni sent a fictitious court order to U.S. District Court, customers and bankers from a made-up court called the District Appeals Court Eastern Division, according to Joseph Whall, president of Auburn Hills-based Whall Group. Whall Group is a turnaround and fraud-investigation company appointed in 2000 to monitor Zaconta's finances. The false order claimed to overrule U.S. District Judge Bernard Friedman's Oct. 29 order that all assets of Zaconta, formerly known as Quality Information Systems Inc., be turned over to Whall Group. ''I really don't think he sees that there has been any wrongdoing on his part and feels that the laws of our land do not relate to him for some reason, '' Whall said. Because he violated his probation by failing to show up for a probation hearing on Oct. 1, Surapaneni
already faces jail time and possible deportation if he comes back to the United States, said Assistant U.S. Attorney Ken Chadwell.
The hearing was scheduled after Zaconta and Surapaneni violated probation by not turning over financial information to the Whall Group as required under terms of the probation. Surapaneni received a summons to appear in court Sept. 26, three months after a June meeting in which Surapaneni was requested to turn the information over. Four days after he received his summons, he left for India. Zaconta was on probation after pleading guilty to visa fraud in 2000. Surapaneni was on probation for an unrelated charge stemming from his arrival at Detroit Metropolitan Airport in 1997, when he tried to bring $49, 000 cash into the country without reporting it. Federal law requires reporting cash of more than $10, 000. Surapaneni served six months for that offense.
Part of the three-year probation terms included allowing a court-appointed monitor to watch over Zaconta's finances. But Chadwell said Zaconta tried to avoid being watched by forming new companies and sharing resources and money among them. ''They were funneling off resources and money to companies owned by relatives, '' Chadwell said. ''They were draining money from the companies under court supervision to new ones that weren't.''
Calls placed to Zaconta were not answered. Attorneys for Zaconta did not return two phone calls by press time.
Two years after the 1997 incident, investigators determined that Zaconta had brought dozens of immigrants from India through false claims and housed many in squalid conditions. Through a plea agreement filed Nov. 30, Zaconta was ordered to pay a $450, 000 fine, pay restitution to displaced immigrants and open its books to Whall. However, Surapaneni and Zaconta were not as forthcoming with financial information as required, Whall said.
The U.S. attorney's Oct. 29 motion says a subsequent investigation discovered that Zaconta is an alter ego for a network of intertwined companies with three things in common: they were controlled by Surapaneni, they benefited from Surapaneni's alleged violation of immigration law and they are linked in a scheme to evade the power of the court.
The documents detail how workers from one of the businesses often did work for another of Surapaneni's companies and how money would be taken in by one company yet recorded by another company. For example, eMarketing365 Inc. used employees officially working for Zaconta, QIS Canada,
Kaltronix Inc. and Yokoz L.L.C. as part of its ''North American eMarketing sales and campaign team.'' Despite the problems, the companies are continuing to operate, Chadwell said, and the Whall Group is trying to get finances in line and pay creditors and employees. Whall said Zaconta and its related companies have about 75 U.S. employees. He estimates the company owes creditors and the Internal Revenue Service about $2 million, which is about the same amount Whall believes Surapaneni wired out of the country before he fled. However, he said, he expects the exact amount owed to be determined before January after the Whall Group pores through
Zaconta's books and reports its findings back to U.S. District Court. Whall said turning the company around is going to be difficult, but not impossible.
''The biggest thing I need to go my way is not have customers walk away, '' he said. ''I've had several long discussions with clients trying to convince them not to do that.'' Meanwhile, Surapaneni is back in India, Chadwell said.
U.S. officials were able to track Surapaneni's escape route from Detroit to Toronto, where he took a KLM Royal Dutch Airlines flight Sept. 30 to Bombay and from there to a smaller city in India, he said. ''He was already long gone before we even got to court, '' Chadwell said. U.S. officials did meet Surapaneni's wife and two children at Detroit Metropolitan Airport when they
were leaving the country hoping that Sam Surapaneni would be with them.
He wasn't, and they were able to leave the country as well.
Manju l
Bangalore
India
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