Indictment — United States v. Denny Bhakta, Southern District of California (Document 1)
Summary
A grand jury indictment filed December 1, 2021 as Document 1 in United States v. Denny Bhakta, Case 3:21-cr-03352-JLS, in the U.S. District Court for the Southern District of California, filed under seal and ordered unsealed on 12/14/21. It alleges that Bhakta, who controlled Fusion Hospitality Corporation and Fusion Hotel Management, LLC, told investors from at least 2016 that Fusion bought blocks of hotel rooms from a multinational hospitality company and resold them at a profit to a major American airline, and gave them fabricated bank records and agreements. The indictment alleges investor money went to personal expenses, gambling losses and payments to other investors. Count 1 charges securities fraud under Title 15, U.S.C., Secs. 78j(b), 78ff, and Count 2 charges money laundering under 18 U.S.C. § 1957 for a $100,000 withdrawal from a Fusion Hotel Management, LLC account.
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“Indictment — United States v. Denny Bhakta, Southern District of California (Document 1).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-3-21-cr-03352-dkt-1-s-d-cal-ff6487a9a1/
, SHA-256 c942c87d1628fd13de3cd5aa1d83612189ff20e5eb5ce090aa9e5cc168b7d18c.Full text
Case 3:21-cr-03352-JLS Document 1 Filed 12/01/21 PageID.19 Page 1 of 5
Dec 01 2021
1 3:50 pm
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A. Cazares
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SEALED ORDERED UNSEALED on 12/14/21 s/ Julieo
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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December 2020 Grand Jury
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UNITED STATES OF AMERICA, Case No. '21 CR3352 JLS
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Plaintiff, I N D I C T M E N T
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v. Title 15, U.S.C., Secs. 78j(b),
14 78ff, and Title 17, C.F.R.,
DENNY BHAKTA, Sec. 240.l0b-5 - Securities Fraud;
15 Title 18, U.S.C., Sec. 1957 -
Defendant. Money Laundering; Title 18,
16 U.S.C., Secs. 981 (a) (1) (C),
982(a) (1), and 982(b), and
17 Title 28, U.S.C., Sec. 2461(c) -
Criminal Forfeiture
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19 The Grand Jury charges, at all times material:
20 INTRODUCTORY ALLEGATIONS
21 1. Defendant DENNY BHAKTA was the founder of, and managed an
22 11 controlled, Fusion Hotel Management, LLC and Fusion Hospitalit
23 llcorporation (collectively "Fusion"), both of which were entities
24 II registered with the California Secretary of State.
25 2. Beginning on a date unknown to the Grand Jury, but at least as
2611 early as 2016, BHAKTA solicited individuals to invest in Fusion. I
27 II soliciting these investors, BHAKTA made material misstatements an
28 II omissions about Fusion and its business dealings.
AJGA:nlv:San Diego:11/30/21
Case 3:21-cr-03352-JLS Document 1 Filed 12/01/21 PageID.20 Page 2 of 5
1 II 3. BHAKTA falsely claimed to investors that Fusion purchased large
2 II blocks of hotel rooms for multiple nights from a multinational
3 II hospitality company (the "Hotel Company") and sold them at a profit t
4 a major American airline (the "Airline").
5 4. BHAKTA provided investors with documents about Fusion's
6 purported business. These documents contained false statements about,
7 among other things, Fusion's annual revenue, Fusion's number ofl
8 llemployees, and Fusion's business activities.
9 II 5. To support his false claims and further his fraud on investors,
10 II BHAKTA provided investors with fabricated documents, including: (1) ban
11 II records that purported to show payments from Fusion to the Hotel Compan
12 II and payments from the Airline to Fusion; (2) purported agreements betwee
13 II Fusion and the Hotel Company; ( 3) purported agreements between Fusio
14 II and the Airline; and (4) documents purporting to be internal analyses
15 II conducted by the Hotel Company.
1611 6. BHAKTA's efforts to solicit investors through these material
17 misstatements and omissions were successful. BHAKTA received funds fro
18 investors, which he falsely claimed Fusion would use to purchase large
19 II blocks of hotel rooms from the Hotel Company. Instead of buying blocks
20 llof hotel rooms with investors' funds, Bhakta used the money to pay fo~
21 II personal expenses, including to cover gambling losses, and to make
22 llpayments to other investors. I
23 II 7. BHAKTA issued promissory notes and shares of stock to investors
24 II who provided funds to BHAKTA and Fusion. These promissory notes an
25 II shares of stock are securities under the federal securities laws.
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Case 3:21-cr-03352-JLS Document 1 Filed 12/01/21 PageID.21 Page 3 of 5
1 Count 1 - Securities Fraud
2 (Title 15, U.S.C., Secs. 78j (b), 78ff, and
3 Title 17, C.F.R., Sec. 240.l0b-5)
4 8. The allegations set forth in paragraphs 1 through 7 are re-
5 alleged as if fully set forth herein.
6 9. Beginning on a date unknown to the Grand Jury but no late
7 than 2016, and continuing until the present, within the Southern District
8 of California and elsewhere, defendant DENNY BHAKTA did knowingly
9 willfully, directly and indirectly, by the use of the means an
10 instrumentalities of interstate commerce and of the mails, use and emplo
11 manipulative and deceptive devices and contrivances in connection wit
12 the purchase and sale of securities issued by Fusion Hospitalit
13 Corporation and Fusion Hotel Management, LLC, in violation of Title 17,
14 Code of Federal Regulations, Section 240.l0b-5, by (a) employing devices,
15 II schemes and artifices to defraud, (b) making and causing to be made
16 untrue statements of material fact, and omitting to state material facts
17 necessary in order to make the statements made, in light of the
18 II circumstances under which they were made, not misleading, and (c)
19 II engaging in acts, practices, and courses of business which operated an
20 II would operate as a fraud and deceit upon any persons, including members
21 II of the investing public and sellers and purchasers of securities of]
22 II Fusion Hospitality Corporation and Fusion Hotel Management, LLC.
23 All in violation of Title 15, United States Code, Sections 78j (b) an
24 78ff, and Title 17, Code of Federal Regulations, Section 240.l0b-5.
25 II Count 2 - Money Laundering
26 (18 u.s.c. § 1957)
27 10. Paragraphs 1 through 7 of the Introductory Allegations above
28 II are re-alleged as if fully set forth herein.
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Case 3:21-cr-03352-JLS Document 1 Filed 12/01/21 PageID.22 Page 4 of 5
111 11. On or about July 26, 2018, within the Southern District of
2IICalifornia and elsewhere, defendant DENNY BHAKTA did knowingly engage
3lland attempt to engage in a monetary transaction by, through, and to a
4 II financial institution, affecting interstate and foreign commerce, i
5 II criminally derived property of a value greater than $10,000, sue
6llproperty having been derived from a Specified Unlawful Activity, that
7 II is, Securities Fraud, in violation of Title 15, United States Code,
8 II Sections 78j (b), 78ff, and Title 17, Code of Federal Regulations,
9 IISection 240.l0b-5, as follows: BHAKTA withdrew $100,000 from a Wells
10 II Fargo account ending in 6589 in the name of Fusion Hotel Management,
11 IILLC; in violation of Title 18, United States Codes, Section 1957.
12 II FORFEITURE ALLEGATIONS
13 II 12. The allegations contained in paragraphs 1 through 7 an
14 II Counts 1 and 2 of this Indictment are re-alleged and incorporated b
15llreference for the purpose of alleging forfeiture to the United States
16 llpursuant to Title 18, United States Code, Sections 981 (a) (1) (C),
17 11982 (a) (1), and 982 (b), and Title 28, United States Code, Section 2461 (c).
18 II 13. Upon conviction of the offense set forth in Count 1 an
19 llpursuant to Title 18, United States Code Section 981 (a) (1) (C) an
20 II Title 28, United States Code, Section 2461 (c), defendant DENNY BHAKT
21 II shall forfeit to the United States any property, real and personal, whic
22 II constitutes or is derived from proceeds traceable to the violation.
23 II 14. Upon conviction of the offense set forth in Count 2 an
24 II pursuant to Title 18, United States Code, Section 982 (a) (1), defendant
25 II DENNY BHAKTA shall forfeit to the United States all property involved i
26 II the offense and all property traceable to such property.
27 15. If, as a result of any act or omission of the defendant, the
28 II property described above, or any portion thereof, cannot be located upo
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Case 3:21-cr-03352-JLS Document 1 Filed 12/01/21 PageID.23 Page 5 of 5
1 II the exercise of due diligence; has been transferred, sold to, o
2 II deposited with a third party; has been placed beyond the jurisdiction o
3 II this court; has been substantially diminished in value; or has bee
4 II commingled with other property which cannot be divided without
5 II difficulty; it is the intent of the United States to seek forfeiture of
6llother property of the Defendant pursuant to Title 18, United States Code,
7 !!Section 982(b) and Title 28, United States Code, Section 2461(c).
8 II All pursuant to Title 18, United States Code, Sections 981 (a) (1) (C),
9 982(a) (1), and 982(b), and Title 28, United States Code, Section 2461(c).
10 DATED: December 1, 2021.
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14 RANDY S. GROSSMAN
Acting United States Attorney
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By:~
ANDREi:G~
17 Assistant U.S. Attorney
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