Fraudster or high-rolling gambler? Denny Bhakta of San Diego finds himself in hot water as he faces not one, but two damning cases. On August 11, 2023, Bhakta was arraigned on additional charges for fraudulently obtaining $4 million in Paycheck Protection Program (PPP) loans and money laundering charges from previous indictments of defrauding investors in his companies, according to the DOJ, Southern District of California. All of this while allegedly running an investment fraud scheme, in a casino no less, which infiltrated the lives of investors to the tune of $15 million, per the SEC.
So how did Bhakta manage to spin this tangled web of deceit? With the PPP loans, it seems he had his foot in many doors, as court documents point to his fraudulent applications with at least 18 loans on behalf of four entities that he managed and controlled. While applying for these loans, Bhakta allegedly misrepresented key information, such as employee and payroll data, his ownership of other businesses, and his intentions for the loan funds. Instead of using the funds for payroll and other eligible expenses, Bhakta allegedly spent it on credit card payments, large casino expenses, and taking out cash, while even using the money to perpetuate his investment fraud scheme.
But this ongoing case is just the latest chapter in Bhakta's story, as his legal battles go a little further back. On December 14, 2021, the SEC filed a complaint against Bhakta and his companies, Fusion Hotel Management and Fusion Hospitality Corporation, accusing him of fraudulently raising at least $15 million from over 40 retail investors. From at least January 2016 to January 2020, it seems Bhakta and his companies deceived investors by claiming to buy blocks of hotel room reservations from major hotel chains and reselling those reservations at higher rates to their clients, including a prominent airline company. Allegedly, Bhakta even fabricated contracts and bank statements to back up his fraudulent claims, using investor funds for personal expenses, gambling, and to pay returns to earlier investors.
The legal gears started turning on March 9, 2022, when the parties filed a Joint Motion for the interlocutory sale of Bhakta's 2017 Porsche 911 Coupe, which had been seized and was subject to a criminal forfeiture allegation according to court documents reviewed by Hoodline San Diego. The United States Marshals Service was directed to sell the Porsche, with the net proceeds to be deposited as substitute property for the forfeiture allegations in the case.
Following the money trail with some detail, Acting US Attorney Andrew R. Haden stated, "The Paycheck Protection Program served as a lifeline to many businesses desperately trying to stay afloat during the pandemic. Anyone who abused this critical program will be held accountable." As his legal battles rage on, Bhakta faces grave consequences. With charges of securities fraud, bank fraud, and money laundering all on the table, he could potentially be looking at up to 30 years in prison according to the Department of Justice. But as we all know, in these cases, the defendants are considered innocent until proven guilty, and Bhakta's fate now rests in the hands of the justice system.
Economic fraud thrived during Covid, and it certainly seems that Bhakta's story is a reflection of that reality.
