San Diego Man Charged with $4 Million Covid-Related Loan Fraud and Money Laundering

Stay informed about the case of a San Diego man charged with $4 million Covid-related loan fraud and money laundering. Learn the details and implications now.

Denny Bhakta of San Diego is facing charges of $4 million Covid-related loan fraud and money laundering. Bhakta, who was already indicted in December 2021 for defrauding investors in his companies, is now accused of fraudulently obtaining loans from the Paycheck Protection Program (PPP) through entities he managed and controlled. The CARES Act established the PPP to provide emergency financial assistance to businesses affected by the pandemic. Court documents reveal that Bhakta applied for and received at least 18 PPP loans, using the funds for personal expenses, making credit card payments, and perpetuating an investment fraud scheme. The charges against Bhakta highlight the importance of holding accountable those who abuse critical assistance programs in times of crisis.

San Diego Man Charged with $4 Million Covid-Related Loan Fraud and Money Laundering

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Overview of the case

In a recent development, Denny Bhakta, a resident of San Diego, has been charged with $4 million in Covid-related loan fraud and money laundering. Bhakta has been accused of obtaining these funds fraudulently through several entities that he managed and controlled. This case is a significant example of the misuse of loan programs aimed at helping businesses during the Covid-19 pandemic.

Charges against Denny Bhakta

Initially, Bhakta faced charges of securities fraud and money laundering in December 2021 for defrauding investors in his companies. However, a superseding indictment has been issued, including additional charges related to loan fraud and money laundering. These charges highlight the extent of Bhakta’s alleged fraudulent activities and their impact on the financial system.

Background on the Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP) was established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Its primary objective was to provide emergency financial assistance to businesses impacted by the Covid-19 pandemic. Under this program, banks were entrusted with providing forgivable loans to small businesses, enabling them to retain their employees and keep their operations running.

Details of the fraudulent loan applications

According to court documents, Bhakta applied for and received at least 18 PPP loans on behalf of four entities under his control. These entities included Fusion Hotel Management, LLC; Fusion Hospitality Corporation; True Vine Hospitality LLC; and Manu Bhakta Foundation. However, it has been discovered that Bhakta’s loan applications contained false information and promises. He misrepresented the number of employees, average monthly payroll expenses, ownership of other businesses, and the intended use of the loan funds.

Misuse of loan funds

Instead of using the obtained funds for their intended purpose, Bhakta allegedly misused them. The superseding indictment reveals that he used the money to make credit card payments, cover expenses at casinos, and make cash withdrawals. These actions demonstrate a clear disregard for the purpose of the loans and a violation of the trust placed in recipients of the PPP funds.

Connection to investment fraud scheme

In addition to the loan fraud, Bhakta has been implicated in an investment fraud scheme. Court documents and statements made in court indicate that he solicited investments in his companies, Fusion Hotel Management, LLC, and Fusion Hospitality Corporation. Bhakta made false claims to investors, stating that his companies routinely acquired discounted blocks of hotel rooms from Hilton and sold them to United Airlines for a significant profit. Instead of utilizing investor funds as promised, Bhakta used the money for personal expenses and to make payments to other investors.

Impact of the Paycheck Protection Program

The Paycheck Protection Program played a vital role in providing much-needed financial aid to businesses struggling during the pandemic. It helped them stay afloat by covering payroll expenses and other eligible business costs. The intent behind forgiving these loans was to alleviate the burden on small businesses and stimulate the economy.

Statement from Acting U.S. Attorney

Acting U.S. Attorney Andrew R. Haden emphasized the importance of holding individuals accountable for abusing the Paycheck Protection Program. He recognized that the program served as a lifeline for many struggling businesses and stated that anyone who exploited it would face the consequences of their actions.

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Summary of charges against Bhakta

The charges against Bhakta include securities fraud, bank fraud, and money laundering. These charges carry a maximum penalty of thirty years in prison, reflecting the severity of Bhakta’s alleged crimes and the impact they had on investors and the financial system.

Government agencies involved in the investigation

The investigation into Bhakta’s fraudulent activities involved multiple government agencies, including the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC). Their collaboration showcases the commitment to combating fraud and protecting the integrity of financial programs such as the PPP.

In conclusion, the case against Denny Bhakta exposes the extent to which individuals can exploit emergency financial assistance programs for personal gain. The misuse of funds intended to support struggling businesses during the Covid-19 pandemic undermines the integrity of such programs and highlights the importance of thorough investigations and swift prosecution. The government agencies involved in this case are determined to hold Bhakta accountable for his actions and to protect the interests of investors and businesses affected by his fraudulent activities.

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