A San Diego man accused of running an investment fraud scheme and taking millions of dollars in ill-gotten pandemic loan funds was convicted by a San Diego federal jury last week on more than two dozen counts of securities fraud. , bank fraud and money laundering.
Denny Bhakta, 42, was accused of first soliciting investments for his companies, Fusion Hotel Management LLC and Fusion Hospitality Corp., and then using investors’ funds for personal expenses, such as gambling and vehicle purchases, and to pay other investors, according to the U.S. Attorney’s Office in San Diego. Prosecutors said that in one particular gambling match that lasted 7 1/2 hours, he lost $1 million.
Prosecutors said investors were told that Bhakta’s companies would buy blocks of hotel rooms at a discount from Hilton, and then sell those rooms at a profit to United Airlines and other companies.
According to prosecutors, Bhakta provided false bank records and false agreements with Hilton and United Airlines to make Fusion’s alleged business dealings appear legitimate. Bhakta received around $35 million from investors.
Among the victims of the investment fraud were Bhakta’s uncle, who lost $4.5 million, as well as Bhakta’s friends and other relatives.
“This sophisticated scheme was unmasked after multiple victims came forward and exposed the fraud,” San Diego U.S. Attorney Tara McGrath said in a statement. “Many of the victims are people who represent the best of us: honest, hard-working Americans who made investments based on a relationship of trust. “The jury’s verdict is a resounding affirmation that justice will prevail over deceit.”
Two years after the investment fraud charges were filed, federal prosecutors charged Bhakta in connection with 18 Payroll Protection Program loans he took out, totaling $4.4 million.
Prosecutors allege that Bhakta misrepresented his company’s payroll expenses, the number of employees and how the money would be used. He also used the names of some of the investment fraud victims to claim they were Fusion employees in order to obtain the loans, prosecutors said.
Bhakta, who also faces a civil lawsuit from the U.S. Securities and Exchange Commission, will be sentenced in January.
Original Story
San Diego man convicted of investment fraud, pandemic loan fraud schemes