Businessman in fed probe accused of fraud
Lying and hiding assets are cited in bankruptcy court
The owner of a cloutheavy fuel distribution firm embroiled in an ongoing federal corruption probe has been accused in bankruptcy court of lying under oath, hiding assets and secretly cutting tens of thousands of dollars in checks to himself and family members.
The Department of Justice attorney assigned to monitor the bankruptcy petition of Black Dog Chicago LLC said in a filing with the court last month that owner Amit Gauri has “engaged in self-dealing” and used his company’s assets “as his personal piggy bank” to fund a lavish lifestyle.
U.S. Trustee Ha Nguyen is also looking into whether Gauri fraudulently obtained hundreds of thousands of dollars in federal loans last spring that were aimed at helping small businesses stay afloat amid the ongoing coronavirus pandemic, court records show.
The developments scuttled an upcoming trial on Black Dog’s proposed plan to emerge from Chapter 11 bankruptcy. Instead, a trustee was appointed earlier this week to take over the affairs of Black Dog Chicago, while three subsidiaries remained under Gauri’s control.
Attorneys for Black Dog and Gauri countered on Friday that the company “voluntarily consented” to the appointment of the Chapter 11 trustee in an effort to open its books and records to a third party, who could investigate any alleged wrongdoing and monitor the finances going forward to put creditors at ease.
Black Dog has since filed amended reports with the court correcting any omissions, the attorneys said in an emailed statement to the Chicago Tribune.
“Any mistakes in the bankruptcy filing were readily admitted by Black Dog when it discovered them, and they have been corrected by amended filings,” the statement read. “There was no intent to hide anything from creditors who are going to be paid in full in any event.”
In a brief hearing Tuesday, U.S. Bankruptcy Judge Janet Baer urged both sides to work together on a new plan — even as the investigation of Gauri’s alleged wrongdoing continues.
“Unfortunately, this case started out with principals that clearly don’t trust each other,” Baer said. The judge set a status hearing for Oct. 21.
Gauri and Black Dog have been under fire since they were each named in federal searchwarrants and subpoenas filed in September 2019 in a sweeping political corruption investigation of former state Sen. Martin Sandoval and a number of suburban mayors and industry heavyweights, including Illinois’ so- called Asphalt King, Michael Vondra.
Gauri, 40, has not been criminally charged. Another lawyer representing him as the government conducts that probe, Daniel Collins, could not immediately be reached for comment.
Last year, the Tribune reported on Gauri’s rise in the city’s business scene, from the hundreds of thousands of dollars in campaign cash he’s showered on local politicians to the relationships he’s forged with several key players in the sprawling federal investigation.
Another controversy ignited earlier this year when a Florida fuel distributor that lost a bid for a $43 million contract to provide diesel to the city of Chicago filed an official protest alleging the process was skewed to take care of Gauri, who had the backing of an influential Chicago alderman. The protest was eventually denied.
But it’s Black Dog’s filing for Chapter 11 bankruptcy in October 2019 that could pose the most legal jeopardy for Gauri.
The bankruptcy petition was filed amid a legal fight with one of Black Dog’s former fuel suppliers over millions of dollars in allegedly unpaid bills, court records show.
When questioned about his petition under oath last November, Gauri acknowledged that he’d met with Sandoval and former state Rep. Luis Arroyo, who also has been charged in federal court with corruption, to discuss issues related to minority-owned business contracts.
Gauri also said he leased and later purchased his trucks directly from Vondra, a longtime player in state construction whose Bartlett offices were also visited by federal investigators last fall. Vondra has not been charged with wrongdoing.
In early 2018, Gauri testified, he began paying Vondra under an asset purchase agreement for the rights to do business under the name Southwind RAS, an acronym for “recycled asphalt shingling.” By June 2018, Black Dog had moved its offices fromWestchester to its current location inLyons in a building owned by Vondra. Gauri testified that he pays Vondra about $12,000 amonth in rent.
In his report to the court on Sept. 21, U.S. Department of Justice attorneyHa Nguyen steered away from any mention of Vondra or the ongoing corruption probe.
But he accused Gauri of defrauding the bankruptcy process from the get-go,
hiding cash disbursements to himself, his father and his wife that occurred just weeks before Black Dog’s bankruptcy filing and should have been reported to the court, records show.
Among the questionable “self-dealing,” Nguyen said, were two disbursements totaling $32,000 to Gauri’s wife from Black Dog’s account at First Midwest Bank.
The main creditor in the bankruptcy case, Parent Petroluem, alleged in one recent court filing that some of those funds were used to pay for luxury personal vehicles for the Gauris, including a Range Rover and aTesla. Gauri has vehemently denied those claims.
Gauri also allegedly failed to disclose payments he made from the same Black Dog account to cover personal expenses, including $63,300 to finance a vacation home in Michigan and $50,700 to purchase a luxury high-rise condo in Chicago, according to Nguyen’s filing.
Nguyen said Gauri also kept hidden from creditors a bank account that was used to make more than $63,000 in disbursements this year, and failed to disclose on financial schedules “valuable contracts” Black Dog has with several government agencies, includingMetra.
Several other lengthy paragraphs in the filing were blacked out.
The day after filing his objection, Nguyen made two discovery requests in court seeking records on more than $500,000 in Paycheck Protection Program andEconomicInjury Disaster loans obtained by Gauriaffiliated companies amid theCOVID-19 pandemic.
Companies in bankruptcy are typically barred fromapplying forPPPloans and must seek court approval an pledge collateral for any EID assistance.
The Tribune first reported that a Black Dog subsidiary was given a PPP loan in April of up to $ 350,000 that Gauri claimedwould save 22 jobs.
In his filing, Nguyen said the Small Business Administration reported two other Gauri-owned subsidiaries, Black Dog Foods LLC and Black Dog Solutions, received another $106,000 in PPP Loans that same month.
A Tribune database of PPP loan disbursements shows that a fourth company affiliated with Gauri, AGPD Paving, received a loan of up to $350,000 in May.
AGPD, which does business under the name Cardi Asphalt, lists Gauri as its manager and has a business address in the same building in Lyons as Black Dog, records show. Like the Black Dog Petroleum loan, AGPD’s application also claimed that 22 jobs would be saved.
The AGPD loan was not listed in Nguyen’s discover request. However, Nguyen said Black Dog Chicago applied for andwas granted an EIDL loan in June in the amount of $150,000.
As of Sept. 22, Nguyen said he had not been able to locate where Gauri deposited theEIDLfunds orwhat theywere used for.
In their emailed statement, the attorneys for Gauri and Black Dog said it was the subsidiaries of Black Dog Chicago, which are not in bankruptcy, that received the loans money, and that the money was used to pay employees to save jobs.