2 Accused of Bilking Financier of $549,000 in Charity T-Shirt Fraud

Two foreign nationals who claimed to hold a contract to manufacture 4.8 million T-shirts for the Hands Across America project have been accused by Los Angeles authorities of bilking a Liechtenstein financier of $549,000.

Guatam Malhotra, 29, a native of India living in La Mirada, was arraigned in Los Angeles Municipal Court Thursday on two counts of theft by false pretenses. A second suspect, Vijay Khanna, 44, of New Delhi, is being sought by the Los Angeles County Sheriff’s Department on the same charges, according to Deputy Dist. Atty. Frederick G. Stewart.

Stewart said Friday that the Hands Across America campaign, which is trying to raise millions of dollars next weekend to feed America’s homeless and hungry, is “totally, completely innocent” in the affair and its officials have been “very cooperative” in a Sheriff’s Department investigation.

Khanna is charged with having employed a forged purchasing order from Hands Across America to raise money from European financier C. K. Pithawalla. Pithawalla, Stewart said, met earlier with Khanna in Zurich, Switzerland, and agreed to provide an $8-million short-term loan to cover production of the T-shirts, which would then be sold to Hands Across America.

On April 21, Pithawalla wired an initial $46,700 from his Swiss bank, which was forwarded to Malhotra’s account at a La Mirada bank, Stewart said. A second installment of $502,500 was similarly transfered on April 23.

But within hours, the prosecutor said, Malhotra “took the money out in the form of cashier’s checks and distributed it to persons and entities in the U.S. and overseas in India. None have anything to do with T-shirts.”

Uncovers Scheme

The alleged scam was uncovered days later, when Pithawalla’s Swiss lawyer, Ulrich Kunzler, traveled to Los Angeles with instructions to oversee the T-shirt manufacturing. Pithawalla had been given a La Mirada address for the T-shirt firm, Western Apparel Inc. When Kunzler arrived there, however, he found that the address was actually Malhotra’s single-family condominium.

“Kunzler was surprised not to find little people working on T-shirts putting Hands Across America symbols on them,” Stewart said.

After a sheriff’s investigation, Malhotra, an illegal alien, was arrested, Stewart said. At Malhotra’s arraignment, Los Angeles Municipal Judge Glenette Blackwell scheduled a May 28 preliminary hearing, set bail at $100,000 and ordered that Malhotra’s passport be surrendered.

Khanna, meanwhile, had apparently fled to India, Stewart said.

Prison Terms Possible

Both men could face maximum sentences of five years and eight months if convicted, Stewart said.

The T-shirts that will be distributed to those participating in the nationwide hand-holding effort on May 25 were actually manufactured by another vendor, according to Jay Cooper, a Beverly Hills attorney representing Hands Across America.

Cooper added that several times during the last year, scam artists have attempted to solicit funds by employing the names of Hands Across America and its predecessor charity, USA for Africa.