Company that promised 1,000 jobs to Pikeville now under federal investigation
Federal court documents show a wire fraud and money laundering investigation into a company that promised to bring 1,000 jobs to Pikeville in 2017.
A federal seizure warrant says around June 2017, Karim Sadruddin and Rahim Sadruddin acted through one of their businesses, Textile Corporation of America, Inc. (TCA), to receive a $3 million economic development grant from Tennessee's Department of Economic and Community Development (ECD).
The plan was for the Sadruddins to purchase and renovate a textile manufacturing facility in Pikeville, Bledsoe County, Tennessee. They joined then-governor Bill Haslam for a ribbon-cutting ceremony in July 2017.
According to a federal seizure warrant, the Sadruddins provided fake invoices and fake wire transfer records as proof that they had already paid for the costs of renovating the facility in order to receive payback from the state grant. The documents also say the Sadruddins received a $230,000 grant from the Tennessee Valley Authority (TVA). That money was intended for the proposed renovations at the textile facility. The documents say the Sadruddins did not spend that money accordingly.
That same document requested the seizure of several bank accounts totaling more than $2.2 million related to the Sadruddins.
Federal agents also accuse the Sadruddins of attempting to defraud the federal government following a contract they agreed on with FEMA.
That contract was worth $30.7 million. The Sadruddins, in the capacity of their businesses, agreed to deliver 475,000 "self-help tarps" to victims affected by the 2017 hurricanes. These court documents claim the Sadruddins did not follow the contract, and provided tarps that did not meet the manufacturing requirements.
FEMA paid the Sadruddins $3.7 million for the contract before suspending the contract.
A search warrant filed in federal court in October 2018 requests the permission to ask Google for email records from the Sadruddins.
Tennessee's ECD department released a statement regarding the investigation. It says, "This is indeed an unfortunate situation on a multitude of levels. We are most disappointed for the residents and families of Pikeville and Bledsoe County."
Spokesperson Scott Harrison says the department began questioning potential mismanagement of the grant funding, and asked the Comptroller's office to investigate.
The Tennessee Bureau of Investigation (TBI) confirms they are actively investigating TCA. We are waiting to hear back from the State Attorney General's Office.
As of Tuesday afternoon, the Sadruddins have not been formally charged with any crimes. We reached out to the TCA for comment on the investigation, but have not heard back.
This is a developing news story. Depend on us to update you as we learn more.