Two brothers who in 2017 pledged to build a textile plant in economically distressed Bledsoe County that would provide 1,000 jobs are set to plead guilty in Chattanooga Federal Court on Tuesday morning.

Karim Sadruddin and Rahim Sadruddin are to plead guilty to two counts of wire fraud and one count of money laundering.

Governor Bill Haslam had been among those attending the announcement at Pikeville by the Sadruddins. The plant never opened.

Prosecutor Steve Neff said the brothers used much of the proceeds from a $3 million federal grant and a $230,000 grant from TVA for other projects, including buying tarps that were to go to hurricane victims.

Authorities said the pleas"derive from an Oct. 3, 2017 email sent by Karim Sadruddin to Rahim Sadruddin and another in the Eastern District of Tennessee and elsewhere, a fraudulent wire transfer record and a fraudulent invoice valued at approximately $1.4 million purporting to reflect work that had been done on the building and a record reflecting the cost of the purchase of the building valued at $850,000.

"This email resulted in a disbursement of funds, on or about Nov. 9, 2017, via checks totaling $2,256,900 from the IDB to Karim Sadruddin, which he later deposited into TCA's Regions Bank account in Suwanee, Georgia and which he and Rahim Sadruddin later used to purchase tarps in the continuation of the scheme to defraud FEMA. 

"The facts from the Information that support Counts Two and Three of the Information to which the defendant is pleading guilty derive from a June 13, 2018, email from Rahim Sadruddin to a representative of TVA, in the Eastern District of Tennessee, with an attached TVA Performance Grant Agreement, signed by Karim Sadruddin, which falsely represented that prior to April 1, 2018, the defendants had already invested $17 million of their total $27 million investment in the Pikeville manufacturing facility.

"On the same day, Rahim Sadruddin sent to a representative of TVA, in the Eastern District of Tennessee, a second email with an attached Commercial Operation Date Certification, signed by Karim Sadruddin, which falsely certified that TCA's Pikeville facility had achieved commercial operation on March 1, 2018.

"These two emails caused TVA to electronically transfer $230,000 in grant proceeds on July 2, 2018, from a TVA bank account located in the Eastern District of Tennessee, to a TCA account at Regions Bank controlled by the defendants and located in the State of Georgia.

"In sum, Karim and Rahim Sadruddin conspired and agreed to participate in a scheme, and did intentionally participate in a scheme to defraud by knowingly making various fraudulent representations via wire ( emails and other wire-related representations) to FEMA, TVA, and the state of Tennessee. This resulted in several financial transactions with a value greater than $10,000 taking place with financial institutions that engage in interstate commerce.

"Karim and Rahim Sadruddin knew they were using money that came from a specified unlawful activity, and the scheme resulted in a collective loss to the victim entities of between $3.5 million and $9.5 million."