The United States’ Memorandum on Restitution — U.S. v. Bhakta, 3:21-cr-03352 (S.D. Cal.), Dkt. 191

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The United States’ Memorandum on Restitution, filed 04/25/25 as Document 191 in Case 3:21-cr-03352, for the May 2, 2025 hearing. It states that a jury convicted Defendant of 18 counts of bank fraud based on Paycheck Protection Program (“PPP”) loans, and that the Small Business Administration (“SBA”) guaranteed the loans and is a victim for restitution purposes. The SBA’s Certificate of Indebtedness shows total indebtedness of $4,762,958.01, which the United States recommends be ordered to the SBA as mandatory restitution. It also recommends restitution to investor victims listed in a table, using bank account records reviewed by FBI forensic accountant Benjamin McDonnell. It asks the Court to seal the restitution order from public view. The signature lines read /s/ Eric R. Olah.

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     Case 3:21-cr-03352-JLS     Document 191   Filed 04/25/25   PageID.3560   Page 1 of 5




 1 ADAM GORDON
   United States Attorney
 2 P. KEVIN MOKHTARI
   ERIC R. OLAH
 3 Assistant United States Attorneys
   California Bar Nos. 253283/295513
 4 Office of the U.S. Attorney
   880 Front Street, Room 6293
 5 San Diego, CA 92101
   Tel: (619) 546-7540
 6
 7 Attorneys  for the Plaintiff
   UNITED STATES OF AMERICA
 8
                          UNITED STATES DISTRICT COURT
 9
10                      SOUTHERN DISTRICT OF CALIFORNIA

11     UNITED STATES OF AMERICA,                    Case No.: 3:21-CR-3352-JLS

12                                                  THE UNITED STATES’
                   Plaintiff,
13                                                  MEMORANDUM ON RESTITUTION
             v.
14                                                  Date: May 2, 2025
15     DENNY BHAKTA,                                Time: 2:00 p.m.
                                                    Courtroom 4D
16                 Defendant.
                                                    The Honorable Janis L. Sammartino
17
18          The United States of America, by and through its counsel, Adam Gordon, United
19 States Attorney, and P. Kevin Mokhtari and Eric R. Olah, Assistant United States
20 Attorneys, hereby respectfully submits this memorandum in support of its restitution
21 recommendations.
22                                              I
23                                        THE LAW
24          Restitution to victims of bank fraud is mandatory under 18 U.S.C. § 3663A. See
25 18 U.S.C. § 3663A(c)(1) (requiring restitution for offenses against property under Title
26 18, “including any offense committed by fraud or deceit”). Further, a victim for
27 purposes of restitution is “a person directly and proximately harmed as a result of the
28 commission of an offense . . . including, in the case of an offense that involves as an
     Case 3:21-cr-03352-JLS   Document 191     Filed 04/25/25   PageID.3561     Page 2 of 5




 1 element a scheme, conspiracy, or pattern of criminal activity, any person directly
 2 harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or
 3 pattern.” 18 U.S.C. § 3663A(a)(2); see also United States v. Johnson, 875 F.3d 422,
 4 426 (9th Cir. 2017) (“Under 18 U.S.C. § 3663A and Ninth Circuit precedent, the district
 5 court could properly order restitution for all victims harmed by Johnson’s scheme,
 6 including those harmed by conduct beyond the count of conviction.”).
 7                                              II
 8                                        ANALYSIS
 9          A jury convicted Defendant of 18 counts of bank fraud in violation of 18 U.S.C.
10 § 1344(2). The bank fraud scheme was based on 18 Paycheck Protection Program
11 (“PPP”) loans that Defendant applied for and received from various banks. While
12 individual lending banks processed and provided the loan funds to Defendant, the Small
13 Business Administration (“SBA”) “backed” or guaranteed the loans and is a victim of
14 Defendant’s bank fraud scheme for restitution purposes.1 Submitted herewith as
15 Exhibit 1 is the SBA’s Certificate of Indebtedness, which shows a total indebtedness
16 resulting from Defendant’s 18 PPP loans of $4,762,958.01.             The United States
17 accordingly recommends Defendant be ordered to pay that amount to the SBA as
18 mandatory restitution under § 3663A.
19          The United States also recommends the Court order Defendant to pay restitution
20 to the investor victims identified in the table below, each “directly harmed by the
21 defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern” under
22 § 3663A. Notably, Defendant falsely claimed the investors in his Ponzi scheme as
23
            See, e.g., United States v. Kasali, 111 F. 4th 637, 651 (5th Cir. 2024) (affirming
            1
24 convictions based on PPP loan fraud and finding “the district court properly included
25 the SBA in the restitution order”); United States v. Joseph, 108 F. 4th 1273, 1280 (10th
   Cir.) (affirming convictions, including restitution order to SBA for PPP loan). United
26 States v. Simpkins, No. 8:21-cr-292-VMC-TGW, 2024 WL 4288077, *1 (M.D. Fl.,
27 Sept. 25, 2024) (substituting the SBA as victim and payee of restitution because “as
   guarantor, the SBA has since guaranty purchased the loan from Celtic Bank” and
28 “already compensated Celtic Bank for the loss incurred due to Simpkins’ crime”).
                                                2
     Case 3:21-cr-03352-JLS   Document 191     Filed 04/25/25   PageID.3562    Page 3 of 5




 1 employees on his PPP loan applications, and he used the bank fraud scheme to further
 2 his ongoing and overlapping Ponzi scheme by using some of the PPP loan funds to pay
 3 interest and/or principal owed to investors. United States v. Ighorhiohwunu, No. 22-
 4 10199, 2023 WL 8594399, *1 (9th Cir., Dec. 12, 2023) (affirming restitution order,
 5 explaining the defendant’s “conspiracy ‘was, in fact, the same scheme as, or was related
 6 to, the scheme’ that caused T.M.’s losses”) (quoting United States v. Thomsen, 830 F.3d
 7 1049, 1068 (9th Cir. 2016) (explaining restitution “may be based on related, uncharged
 8 conduct that is part of a fraud scheme”); United States v. Anieze-Smith, 923 F.3d 565,
 9 572 (9th Cir. 2019) (“the district court properly included losses relating to the overall
10 fraudulent scheme in the restitution amount”).
11          Unless the table below indicates otherwise, the amounts invested and received by
12 an individual are based on FBI forensic accountant (and trial witness) Benjamin
13 McDonnell’s review of Defendant’s bank account records, and the proposed restitution
14 amounts are simply the difference between the amount an investor paid to Defendant
15 and the amount they received from Defendant (i.e., their actual loss). The table does
16 not include the few individuals that received from Defendant amounts equal to or
17 greater than the amounts they invested. Further, the table includes only the losses of
18 individuals that confirmed their losses by completing and returning to the FBI a
19 questionnaire, an interview with the FBI, a victim impact statement, a statement through
20 their retained counsel, and/or trial testimony.      For example, consistent with the
21 questionnaire she submitted and her interview with the FBI , 84-year-old victim P.M.
22 testified at trial that she invested $50,000 and received only $500 in return.
23
                 Victim             Amount            Amount          Restitution Owed
24                                  Invested          Received
                  A.P.            $5,232,050.50     $1,871,207.12        $4,500,000 2
25
                H.G. LLC           $1,860,000       $1,193,360.84        $665,639.16
26
27         This loss amount is taken from A.P.’s victim impact statement. Further, the
            2

   United States understands that much of the money A.P. received from Defendant was
28 used to pay other investors in Fusion.
                                                3
     Case 3:21-cr-03352-JLS   Document 191    Filed 04/25/25   PageID.3563    Page 4 of 5




 1              Victim             Amount           Amount          Restitution Owed
                                   Invested         Received
 2               M.P.            $4,511,194.32      $123,360           $4,561,345 3
 3                V.P.            $1,262,750        $41,119            $4,143,575 4
               K.H. LLC            $300,000            $0               $300,000
 4                K.B              $400,000        $98,745.21          $301,254.79
 5            S.R.G. LLC           $100,000            $0               $100,000
              D. TRUST             $395,000            $0               $395,000
 6               P.J.D.            $718,600         $440,000            $278,600
 7               A.H.              $775,000        $20,184.72          $754,815.28
                 M.R.               $75,000            $0                $75,000
 8
                 A.H.              $120,000         $24,350              $95,650
 9          A.H. and G.H.           $25,000            $0                $25,000
                J.M.U.             $815,000         $135,800            $679,200
10
                 P.M.               $50,000           $500               $49,500
11              P.T.O.              $20,000        $5,599.86           $14,400.14
12              S.A.P.              $40,000            $0                $40,000
                  A.P.              $40,000            $0                $40,000
13                R.P.              $11,040        $9,099.40            $1,940.60
14                N.P.              $35,000        $21,492.20          $13,507.80
                  T.P.             $145,000            $0               $145,000
15           S.P and A.B.           $75,000            $0                $75,000
16               M.S.               $25,000            $0                $25,000
                N.R.B.             $100,000            $0               $100,000
17
                 M.P.               $65,000            $0                $65,000
18          J.P.C.I.G. LLC          $35,000        $32,364.38           $2,365.62
              S.E.C. LLC           $404,900        $21,062.50          $383,837.50
19
20
21          This loss amount is taken from M.P.’s victim impact statement dated February
            3

   6, 2025. Notably, the figure is less than the $5,012,400.96 total in a written agreement
22 that Defendant, M.P., and their respective attorneys signed on July 29, 2019.
23
          4
            V.P.’s victim impact statement (dated February 7, 2025) indicates $2,871,575
24 of “investments with” Defendant, attorney’s fees of $319,950, $115,266 in interest paid
25 to the bank, and $1,272,000 paid to friends and family, for a total actual loss of
   $4,578,791. The United States’ recommended amount excises V.P.’s attorney’s fees
26 and paid interest from the sum in V.P.’s victim impact statement, as those amounts are
27 not subjects of restitution under § 3663A. Finally, in a written agreement Defendant
   and V.P. signed in August 2019, Defendant agreed to pay V.P. $4,250,000 based on
28 V.P.’s investments in Fusion.
                                               4
     Case 3:21-cr-03352-JLS   Document 191     Filed 04/25/25   PageID.3564     Page 5 of 5




 1              Victim             Amount          Amount        Restitution Owed
                                   Invested        Received
 2                  Victims that Invested through DNZ Investments LLC5
 3              V.A.                                                  $25,000
                H.B.                                                  $75,000
 4              N.B.                                                 $335,445
 5          C.D. and I.P.                                            $475,000
            T.D. and T.D.                                            $225,000
 6       DNZ Investments LLC                                         $294,500
 7               S.F.                                                 $75,000
                A.P.                                                 $150,000
 8
                T.T.                                                 $205,000
 9
10                                             III
11                                      CONCLUSION
12          The United States respectfully requests the Court (1) order Defendant to pay
13 restitution to the victims in the amounts identified both herein and in a simultaneously
14 submitted proposed order that includes victim names and addresses, and (2) seal the
15 restitution order from public view. See 18 U.S.C. § 3771(a)(8) (providing victims the
16 “right to be treated with fairness and with respect for the victim’s dignity and privacy”).
17
            DATED: April 25, 2025                        ADAM GORDON
18                                                       United States Attorney
19
                                                         /s/ Eric R. Olah
20                                                       P. KEVIN MOKHTARI
21                                                       ERIC R. OLAH
                                                         Assistant U.S. Attorneys
22
23
24
25
           At trial, the Court admitted United States’ exhibit number 8-17, an unsigned
            5
26 Memorandum of Understanding Defendant provided to victim N.B. Relevant here, the
27 document identifies a “combined net principal balance of $1,910,000” that Fusion
   Hospitality Corporation owes to DNZ Investments LLC, which is an entity several
28 individuals used to invest in Fusion.
                                                5


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