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Sewing mill that promised 1K jobs reclaimed at auction

July 30, 2019

PIKEVILLE, Tenn. (AP) — A sewing mill that once promised 1,000 jobs for Tennessee but never made anything has been reclaimed by the company that financed the sale.

The Chattanooga Times Free-Press reports no bidder at a foreclosure auction Monday offered to pay more than the $1.4 million in debt owed by the Textile Corporation of America for the shuttered Pikeville plant. It was reclaimed by Whoriskey Inc.

In 2017, the textile company’s leaders, Karim and Rahim Sadruddin, vowed to invest $27 million in the mill to produce apparel, bedding and linens for the medical, educational and hospitality industries. The company also received more than $3 million in grants from Tennessee agencies. But court records show the business used high-interest lenders to purchase the property.

The FBI executed a search warrant at the plant in February 2019. It was then padlocked because of the federal agency’s investigation of suspected wire fraud, mail fraud and money laundering.

“There is reasonable cause to believe that the Sadruddins have perpetuated grant fraud against a department of the state of Tennessee, as well as grant and contract fraud against agencies of the federal government,” FBI Special Agent David Kukura said in a court affidavit. “In order to gain the state grant funds, the Sadruddins submitted false invoices and a false wire transfer record as purported proof that they had incurred costs associated with the renovation of the manufacturing facility.”

The FBI, Tennessee Bureau of Investigation and Tennessee Comptroller of the Currency have been investigating fraud claims against the Sadruddins since June 2018, according to court records.

The two haven’t been criminally charged, according to Raine Palmer, a spokesperson for the U.S. Attorney’s Office in Knoxville.

Bledsoe County Mayor Greg Ridley said he’s “deeply disappointed” by the failed venture but eager to find a new industry for the plant. One reason Pikeville had been chosen as the location for the sewing mill is because of its higher jobless rate compared to many other counties in the state. Pikeville is about 55 miles (90 kilometers) north of Chattanooga in eastern Tennessee.

CEO Karim Sadruddin’s attorney Lance Pope said in a statement Monday night that Textile Corporation of America had made “significant strides” in preparing the plant for production. Pope and Karim Sadruddin both attended the auction Monday but the newspaper reported that the CEO declined to answer any questions.

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Information from: Chattanooga Times Free Press, http://www.timesfreepress.com

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