San Diego Grifter Siphoned $4M in COVID Funds

San Diego con man Denny Bhakta is facing the music for a brazen scheme to pilfer over $4 million in COVID-19 relief funds. The feds allege Bhakta systematically defrauded the Paycheck Protection Program (PPP), diverting emergency assistance meant for struggling businesses into his own pockets. This isn’t a new offense; Bhakta was already under indictment for a separate investor fraud, and this latest development paints a picture of a serial grifter.

Bhakta allegedly submitted at least 18 fraudulent PPP loan applications on behalf of four companies he controlled: Fusion Hotel Management, LLC; Fusion Hospitality Corporation; True Vine Hospitality LLC; and Manu Bhakta Foundation. The indictment details a litany of lies – inflated employee numbers, fabricated payroll figures, and deliberately misleading statements about how the funds would be used. It was a calculated effort to exploit a program designed to keep businesses afloat during a national crisis.

The PPP, established under the CARES Act, was intended as a lifeline for small businesses reeling from the pandemic’s economic fallout. Banks were tasked with distributing forgivable loans, trusting recipients to use the money for legitimate expenses like payroll and rent. Bhakta allegedly treated it like a personal ATM. Federal prosecutors say the $4 million wasn’t used to save jobs or keep businesses running; it vanished into a vortex of personal spending.

The indictment lays out a disturbing pattern of misuse. Bhakta allegedly used the stolen funds to pay off credit cards, gamble at casinos, and make straight-up cash withdrawals. This wasn’t about keeping a business alive; it was about funding a lavish lifestyle on the backs of taxpayers and legitimate businesses desperately needing help. The feds are also tying the PPP fraud to his pre-existing investment scam.

Court documents reveal Bhakta was already accused of swindling investors in his hotel ventures, Fusion Hotel Management and Fusion Hospitality Corporation. He pitched a scheme where he supposedly acquired discounted hotel rooms and resold them to United Airlines for a hefty profit – a claim the feds say was entirely false. Investor money, like the PPP loans, was allegedly funneled into Bhakta’s personal expenses and used to pay off earlier investors, a classic Ponzi scheme tactic.

This case underscores the vulnerability of emergency relief programs to exploitation. While the PPP undoubtedly saved countless businesses, it also attracted predators like Bhakta, eager to capitalize on the chaos and desperation. Acting U.S. Attorney Andrew R. Haden made it clear: those who abuse these programs will be held accountable. The feds are sending a message – stealing from a crisis won’t be tolerated. Bhakta now faces a potentially lengthy prison sentence if convicted on the multiple fraud and money laundering charges.

The investigation involved multiple federal agencies, including the Small Business Administration – Office of Inspector General (SBA-OIG) and the FBI. They spent months untangling Bhakta’s web of companies and financial transactions to expose the alleged fraud. The case serves as a stark reminder that even in times of crisis, the feds are watching, and those who attempt to profit from disaster will face the consequences.

Bhakta’s actions not only robbed businesses of vital funds but also eroded public trust in critical assistance programs. The ripple effects of such fraud can be far-reaching, impacting the economy and hindering future relief efforts. As the legal proceedings unfold, the feds are building a case to ensure Bhakta pays for his alleged crimes and that others are deterred from following in his footsteps.