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Chicago Businessman Veluchamy to Hand Over Passport

By Tanya Roth, Esq. | Last updated on

Be warned: If you owe the bank, your passport could be seized!

There’s obviously more to it than that but in the case of Mr. and Mrs. Veluchamy, the bank came after more than just the shirts off their backs when they defaulted on a $39 million loan from Bank of America.

Pethinaidu and Paremeswari Veluchamy, of the multi-million dollar Veluchamy Enterprises in Chicago, defaulted back in 2009, on a massive loan from Bank of America. BoA sued them for breach of contract and the district court entered a judgment against the Veluchamys in 2010.

BoA then tried to locate assets held by the debtors but the debtors were "sluggish" and from January to March 2010, they made excuses, invoking their Fifth Amendment privileges or at least, trying to invoke them.

Finally, when the District Court rejected their excuses, BoA came to learn that the couple had transferred approximately $20 million to their account in India after the 2009 default. They also did many other schemes to hide assets, such as diluting their ownership interests in non-movable assets located in the U.S.

Based on all of this, the bank moved for an emergency order compelling the couple to produce the funds that they transferred to India. The motion also requested the Veluchamys to hand over their passports to the court, out of fear that the couple would make a run for it. The motion was granted.

The Veluchamys appealed to the Seventh Circuit Court of Appeals, saying that the court order seizing their passports was not proper, as the district court had no power to seize their passports.

Well, did it? The Seventh Circuit Court of Appeals said that this power is rooted in state law. And under Illinois state law, the court has "a variety of tools that can be used to satisfy a judgment."

The broad grant of power conferred by Illinois law, the court felt, granted the district court the power to exercise "some minimal control" on the party subject to an order to produce funds.

And if the seizure of passports was necessary to carry out the order, then so be it, said the Seventh Circuit Court of Appeals.

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