Nov 17 (Reuters) - U.S. prosecutors are probing a group

of telecoms firms after BlackRock's ( BLK ) private credit arm,

HPS Investment Partners, said it lent them over $400 million

backed by receivables that appear to be fake, the Financial

Times reported on Monday.

The Department of Justice is investigating entities tied to

Bankim Brahmbhatt, a little-known executive whose companies

borrowed heavily from HPS, the report added, citing two people

with knowledge of the matter.

Funds run by HPS began lending to companies tied to

Brahmbhatt in 2020, with the loans backed by receivables the

firms claimed were owed by major telecom groups, according to

the report.

In a Delaware court filing earlier in the year, funds

managed by HPS accused Brahmbhatt and his controlled companies

of "an extraordinarily brazen and widespread fraud" alleging the

documents to verify the receivables were fabricated, as per the

report.

Prosecutors in the U.S. Attorney's Office for the Eastern

District of New York (EDNY) in Brooklyn are leading the probe,

the report said.

BlackRock ( BLK ) and EDNY declined to comment. Brahmbhatt did not

respond immediately.

Of the $430 million HPS lent to Brahmbhatt-linked firms,

roughly half was funded with leverage from BNP Paribas, the

report added, citing a person with knowledge of the matter.

BNP Paribas did not immediately respond to a Reuters request

for comment.

The report says that the HPS funds were specialist

asset-backed finance vehicles - a niche segment of the private

credit market, which has seen some recent risks emerge.

Recent bankruptcies of First Brands, a major U.S. auto-parts

supplier, and subprime lender Tricolor have intensified concerns

over the stability of the U.S.'s vast private credit market.

The fallout, which includes billions in undisclosed debt and

losses for high-profile banks and funds, has prompted scrutiny

of aggressive lending structures and opaque finance practices.