Nepal Court Convicts 16, Including Ex-Deputy PM, in U.S. Refugee Resettlement Fraud

The Kathmandu District Court has convicted 16 individuals—including a former deputy prime minister, a former home minister, and a former home secretary—for their roles in the high-profile Bhutanese refugee scam. The verdict, delivered by Judge Tej Bahadur Khadka, sitting as a single-judge bench, on July 7, 2026, found that a powerful syndicate fabricated government documents to falsely portray genuine Nepali citizens as Bhutanese refugees and systematically defrauded them under the pretext of resettlement in the United States.

While the court found the defendants guilty of multiple offenses, including fraud, organized crime, and crimes against the state, it has scheduled a separate hearing for July 13, 2026, to formally announce individual prison sentences and financial penalties after reviewing pre-sentencing evaluation reports. Seven defendants were fully acquitted of all charges, while proceedings against eight fugitive defendants remain suspended under criminal procedure rules until they are apprehended.

File Reconstruction After the “Gen Z” Arson

The verdict also revealed an unprecedented administrative challenge. On September 9, 2025, during violent “Gen Z” youth protests, the Kathmandu District Court building was set on fire. The blaze completely destroyed the original physical case files and evidence stored at the court.

Following emergency directives from the Supreme Court, the entire case file was reconstructed and authenticated using certified copies provided by the District Government Attorney’s Office, the District Police Range, the Ministry of Home Affairs, and legal counsel representing both the victims and the defendants.

Rejection of Demands to Summon High-Profile Leaders

Early in the final hearings, legal representatives for the informants—including Ram Kumar Regmi, Premraj Panthi, and Suman Dahal—filed an urgent application requesting that the court summon and record statements from several senior political figures. They argued that leaders including Khadga Prasad Oli (K.P. Oli), Arzu Deuba Rana, Prem Kumar Rai, Manju Khand, and Ram Bahadur Thapa (Badal) had been repeatedly implicated during interrogations and witness testimony.

Judge Khadka rejected the application, ruling that a district court exercising ordinary criminal jurisdiction could not assume the extraordinary writ jurisdiction of higher courts to compel unindicted individuals to testify. The court noted that state prosecutors had expressly reserved the right in their original charge sheet to file supplementary indictments if ongoing investigations produced objective evidence against those individuals. Without a formal supplementary charge sheet filed by the prosecution, the court ruled that it could not unilaterally summon them.

The Core Forgery Scheme

The court closely examined the structure of the scheme, finding that a 2019 government task force report—originally led by former Home Ministry Joint Secretary Balkrishna Panthi to address unresolved refugee issues—had been intercepted and altered. While the authentic report submitted to the Prime Minister’s Office contained only nine annexes and recommended recognition of a maximum of 429 unrecorded refugees, a counterfeit version was later created. The forged report introduced unauthorized Annexes 9(a) and 9(b), expanding the list to falsely validate 875 individuals from 581 families as eligible refugees.

The court ruled that Keshav Prasad Dulal and Sanu Bhandari were the principal architects of the counterfeit report and fake identity cards. Prominent Bhutanese refugee leader Tek Nath Rijal was also convicted of document forgery after admitting during trial that he had personally signed between 20 and 25 counterfeit refugee identity cards. Rijal testified that Dulal and Bhandari had misled him into believing the cards were official documents issued by the Ministry of Home Affairs.

However, the court acquitted other senior political figures and bureaucrats—including Top Bahadur Rayamajhi, Balkrishna Khand, and Tek Narayan Pandey—of the specific charge of document forgery, citing insufficient physical evidence linking them to the actual creation of the forged report, although they were convicted on other charges.

Evidentiary Breakdown: The Politician–Bureaucrat Nexus

The judgment described a coordinated syndicate in which government policy was manipulated for financial gain. It identified former Deputy Prime Minister Top Bahadur Rayamajhi as one of the principal masterminds. Refugee leader Tek Nath Rijal testified that Rayamajhi personally led the operation and even accompanied him to meet political leader Pushpa Kamal Dahal (“Prachanda”) to discuss the refugee issue. According to Rijal, Dahal instructed them to coordinate directly with Rayamajhi. Co-defendant Sanu Bhandari also testified that he paid Rayamajhi NPR 20 million, including a direct deposit of NPR 4 million into the bank account of Rayamajhi’s son.

Former Home Secretary Tek Narayan Pandey was found to have manipulated government policy from within the ministry. The court reviewed extensive Viber conversations between Pandey and ringleader Keshav Prasad Dulal, which showed that Pandey bypassed established administrative procedures under Dulal’s influence and unilaterally arranged a ministerial extension of the task force’s mandate to include the fraudulent refugee lists.

Former Home Minister Balkrishna Khand was convicted as an accomplice for facilitating the organized fraud. Although prosecutors presented no direct banking evidence showing that he personally profited, Viber conversations between Pandey and Dulal showed that Pandey arranged meetings between Dulal and Khand while explicitly referring to the delivery of “gifts” and other items intended for the minister. Additionally, intermediary Ang Tawa Sherpa testified that he had returned a portion of the illicit funds to victims through Khand’s personal secretary.

Meanwhile, former security adviser Dr. Indrajit Rai was found to have received NPR 45 million from Sanu Bhandari in exchange for providing administrative protection to the operation. The payment was corroborated by detailed financial records contained in a personal diary seized during a police raid on Bhandari’s residence.

Roles of Convicted Accomplices

The court also convicted several lower-profile individuals for assisting the scheme.

Narendra K.C. leaked confidential Ministry of Home Affairs documents and internal updates to the ringleaders, a finding supported by digital forensic evidence recovered from his mobile phone. Shamsher Miya provided his government-issued vehicle to racketeer Sandesh Sharma, enabling the transportation of victims while creating the appearance of official authority.

Hari Bhakta Maharjan allowed bank accounts belonging to his wife, Laxmi Maharjan, and an associate, Keshav Tuladhar, to be used to transfer large sums of money. Niranjan Kumar Kharel impersonated a government security official while overseeing biometric data collection and medical examinations for victims at unauthorized locations.

The Case of Bechan Jha and Supplementary Filings

In a separate but related case (No. 080-01-0637), the court found newly arrested defendant Bechan Jha guilty of attempted fraud. Bank records showed that Jha accepted an NPR 20 million check from co-defendant Ram Sharan K.C.; however, the check was dishonored because of insufficient funds. Since the transaction was never completed, the court acquitted him of forgery, organized crime, and crimes against the state, convicting him only of attempted fraud.

A supplementary case (No. 080-81-9425), filed following a complaint by victim Dafuri Sherpa, established that the syndicate had defrauded another group of victims of an additional NPR 21,792,000.

Why Seven Defendants Were Acquitted

The court acquitted seven defendants after concluding that their names, resources, or bank accounts had been used without their knowledge or criminal intent. Among them was Sandeep Rayamajhi, whose acquittal followed evidence showing that the controversial NPR 4 million deposited into his account by Sanu Bhandari was unrelated to the scam. Instead, the payment was verified as a legitimate 2018 business transaction arising from the sale of shares in Leon Traders Ltd.

Similarly, the court acquitted Pratik Thapa after prosecutors failed to present credible financial evidence linking him to the fraudulent syndicate. The informant’s testimony against him was also found to be inconsistent during cross-examination.

Other defendants were acquitted because they had acted in good faith or had no connection to the conspiracy. The court found that Ram Sharan K.C. had no intention of defrauding anyone and had accepted money from personal acquaintances solely because of his trust in refugee leader Tek Nath Rijal. In the case of Tanka Kumar Gurung, the court found no evidence of criminal wrongdoing, noting that his only connection to the case was ownership of a restaurant where some of the ringleaders had held meetings.

The court also determined that Laxmi Maharjan and Keshav Tuladhar were unaware that their bank accounts had been misused by the principal conspirators. Likewise, Ashish Budhathoki was found to be an innocent third party whose banking credentials had been compromised and used by the ringleaders to transfer illicit funds.