San Diego Man Charged with $4 Million Covid-Related Loan Fraud and Money Laundering
Summary
This August 11, 2023 release reports that Denny Bhakta of San Diego was arraigned on a superseding indictment charging that Bhakta fraudulently obtained $4 million in PPP loans. According to charging documents, Bhakta applied for and received at least 18 PPP loans for four entities, Fusion Hotel Management, LLC; Fusion Hospitality Corporation; True Vine Hospitality LLC; and Manu Bhakta Foundation, misrepresenting employees and payroll, and used the money for credit card payments, casino expenses and cash withdrawals. Bhakta was first indicted in December 2021 on securities fraud and money laundering charges over an investment fraud that took in at least $28 million from investors since 2016, based on claimed hotel room blocks from Hilton resold to United Airlines. The case number is 21-CR-3352-JLS, and the charges are accusations.
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NEWS RELEASE SUMMARY – August 11, 2023 SAN DIEGO – Denny Bhakta of San Diego was arraigned in federal court today on additional charges that he fraudulently obtained $4 million in Paycheck Protection Program loans through several entities he managed and controlled. Bhakta was first indicted in December 2021 for defrauding investors in his companies; a grand jury returned a superseding indictment this week that includes additional charges. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted to provide emergency financial assistance to Americans suffering economic harm as a result of the COVID-19 pandemic. The CARES Act established the Paycheck Protection Program known as PPP, under which banks would make forgivable loans to small businesses, so that those businesses could keep their doors open and employees on their payroll. If a business used the money for payroll and other eligible business expenses, the loans would be forgiven, and the federal government’s Small Business Administration would pay back the bank. According to court documents, Bhakta applied for and received at least 18 PPP loans on behalf of four entities he managed and controlled, including Fusion Hotel Management, LLC; Fusion Hospitality Corporation; True Vine Hospitality LLC; and Manu Bhakta Foundation. According to charging documents, his loan applications contained lies and false promises. He misrepresented the entities’ number of employees and average monthly payroll expense, his ownership of other businesses, and whether the PPP loan funds would be used for payroll and other eligible expenses. Bhakta did not use the money as promised; instead, he used the funds to make credit card payments, pay large expenses at casinos, and make cash withdrawals, according to the superseding indictment. He also allegedly used some of the money to perpetuate an investment fraud scheme. Bhakta was originally charged with securities fraud and money laundering for running an investment fraud scheme that took in at least $28 million from investors since 2016. According to court documents and statements made in court, Bhakta solicited investments in his companies, Fusion Hotel Management, LLC and Fusion Hospitality Corporation. Bhakta falsely told investors that Fusion routinely acquired discounted blocks of hotel rooms from Hilton, which Fusion then sold to United Airlines at a higher price for a significant profit. Instead of buying blocks of hotel rooms with investors’ funds, however, Bhakta used the money for personal expenses and to make payments to other investors. “The Paycheck Protection Program served as a lifeline to many businesses desperately trying to stay afloat during the pandemic,” said Acting U.S. Attorney Andrew R. Haden. “Anyone who abused this critical program will be held accountable.” DEFENDANT Case Number 21-CR-3352-JLS Denny Bhakta Age: 41 San Diego, CA SUMMARY OF CHARGES Securities Fraud – Title 15, U.S.C., Sections 78j(b), 78ff, and Title 17, C.F.R., Section 240.10b-5 Bank Fraud – Tile 18, U.S.C. Section 1344(2) Money Laundering – Title 18, U.S.C., Section 1957 Maximum penalty: Thirty years in prison AGENCY Federal Bureau of Investigation Securities and Exchange Commission *The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty. On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus . Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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