Sadruddin brothers plead guilty to Pikeville plant & FEMA frauds

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CHATTANOOGA (WDEF) – Prosecutors say two brothers have entered guilty pleas to defrauding the government, and leading on job seekers in Pikeville in the process.

Rahim and Karim Sadruddin are pleading guilty to wire fraud and money laundering.

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In one case, prosecutors say they landed more than $30 million from FEMA to provide tarps for hurricane victims in Puerto Rico.

But closer to home, prosecutors say they also received government incentives based on a promise to build a textile plant in Pikeville, producing 1000 jobs.

They cut the ribbon on the project but investigators found only a few sewing machines and dangling electrical outlets.  And that’s as far as it ever got.

When the deal goes through, the Sadruddins will face up to 30 years  on the tarp scheme and up to ten years for the money laundering.

They have also agreed to forfeit private houses, vehicles, bank accounts and personal property to the government.

“This fraud scheme siphoned millions of federal and state tax dollars while preventing disaster victims from receiving quality materials to protect their homes,” said James E. Long, Special Agent in Charge, Major Frauds and Corruption Unit, DHS OIG.

“Fraud perpetrated against FEMA is detrimental to our nation’s infrastructure and safety, especially from programs that support local communities and disaster victims.”

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