For the reasons set forth below, the Court DENIES Defendant's motion. However, according to authorities, these claims were false. - Check with federal and state securities regulators to find out if there have been any complaints against the company or person youre thinking of doing business with. All rights reserved. 20. The case began in September 2013, when our Sacramento office was contacted by a representative of one of Wannakuwattes business associates who thought he might be the victim of a Ponzi scheme. One spoke about having to delay retirement and sell his house to make ends meet. Compare with Westlaw Troy L. Nunley United States District Judge ORDER This matter is before the Court on Defendant Deepal Wannakuwatte's ("Defendant") Motion for Compassionate Release Pursuant to 18 U.S.C. Wannakuwatte offered his investors several different bogus high-yield investment opportunities, most of which related to his purported relationship with the VA. And to prove his bona fides to potential investors and to lenders he was trying to borrow money from, he showed them phony corporate documents as well as actual personal and corporate tax returns where he had reported and paid taxes that falsely overstated his personal income and annual gross receipts and sales for IMG. M.S. He falsely claimed that these companies did tens of millions of dollars in business with federal agencies every year, most notably the Department of Veterans Affairs. The reason for the lower figure was that some investors got their money back. Ultimately, Wannakuwatte obtained well over $230 million from his victims. The $50 billion in Ponzi schemes uncovered from 2008 to 2013 would rank in the top 75 countries in the world in terms of gross domestic product. [1] [2] The new Las Vegas team was shut down a few weeks later, before it even started after owner Deepal Wannakuwatte was arrested for running a Ponzi scheme. In the early 20th century, a little-known Italian immigrant gained international notoriety after his investment venture promising astronomical returns through the resale of postal reply coupons was proved to be mathematically impossible. 5 Hypergrowth Stocks With 10X Potential in 2023, purchase $200,000 in emergency rations to feed the emus, a $3 million private plane that had been pledged as collateral., beneficiary of an investment by Barbara Corcoran, Penny Stocks How to Profit Without Getting Scammed, When Fraud Bites Business: Lost Fortunes, Reputations and Lives, 3 Big Ways That Medicare Fraudsters Rip You Off, Even if Block Beats on Earnings, Stay Away From SQ Stock, Louis Navellier and the InvestorPlace Research Staff, Rare Stock Indicators Show the Market Is About to Skyrocket, Ideanomics (IDEX) Stock Surges 90% Ahead of Possible Delisting, MULN Stock Alert: UNC Charlotte Orders Mullen Vans. All rights reserved. In that position, Rocco solicited club members to invest in his company, Limestone Capital Services, which they were told provided wholesale financing of cigarette purchases for a tobacco shop located on the Shinnecock Native American Reservation. In total, Sundown raised more than $7 million from over 150 investors. Deepal Wannakuwatte, former owner of the Sacramento Capitols professional tennis team, has been ordered to pay more than $100 million in restitution to victims of a decade-long Ponzi scheme he perpetrated. Defendant is 69 years old and claims he is particularly vulnerable to COVID-19 because he suffers from multiple medical conditions, including serious lung disorders, a severely compromised immune system, hypertension, and gastrointestinal bleeding. Assistant United States Attorneys Michael Beckwith and Kevin Khasigian are prosecuting the case. Deepal took full advantage of him in any way he could, she wrote. Unfortunately, it wasnt. SACRAMENTO, Calif. Deepal Wannakuwatte, 63, of Sacramento, pleaded guilty today to one count of wire fraud in furtherance of a long-running and large-scale fraud scheme, announced United States Attorney Benjamin B. Wagner, Special Agent in Charge Monica M. Miller of the FBI's Sacramento Field Office, Jose M. Martinez Special Agent in Charge for U.S. Attorney's Office, Eastern District of California, Domestic Violence, Child Exploitation, and Human Trafficking Prevention, Sacramento Businessman Indicted For Bank Fraud, Mexican National Residing in Bakersfield Sentenced to 18 Months in Prison for Illegal Cockfighting in Violation of the Animal Welfare Act, Laser Strikes on Kern County Sheriff Helicopter Lead to Prison Sentence, Federal Agent Pleads Guilty to Making False Statements in Connection with a Sexual Relationship with a Victim Witness. BOP records do, however, confirm Defendant has been diagnosed with essential (primary) hypertension. . Although the government has initiated proceedings to seize his home in South Land Park, vacation properties in Hawaii and on the Oregon coast, and other assets, its considered unlikely that victims will receive more than pennies on the dollar. Under Wannakuwattes plea deal, both the government and defense recommended a 20-year prison term. He was ordered by a federal judge last month to pay millions in restitution to his victims, FBI.gov is an official site of the U.S. Department of Justice. In truth, the government contracts were worth only $25,000. On Thursday, a federal judge ordered Deepal Wannakuwatte, 64, of Sacramento, to pay $108,199,425 in restitution to victims of his long-running fraud scheme, United States Attorney Benjamin B. Wagner announced today. However, the payment of these returns is made not from legitimate business activities, but rather from incoming funds from new investors. Barely three months ago, Deepal Wannakuwatte was the picture of success: owner of a medical-supply company and of the Sacramento Capitals professional tennis team. A former owner of the Sacramento Capitals professional tennis team, Wannakuwatte purchased properties in Hawaii, Oregon and California. The investigation determined that Wannakuwatte told his investors that two of his companies were involved in the international sale of latex gloves and that it did business with government agencies, in particular the Department of Veterans Affairs (VA). DEEPAL WANNAKUWATTE, Defendant. 24, 2020). Victims are expected to recover at least 50% of their losses. Wagner said losses to investors totaled around $100 million. Finally, the toll on the criminal justice system is also noteworthy. The Sentencing Commission's relevant policy statement on compassionate release identifies medical conditions that satisfy the "extraordinary and compelling" requirement. A Toronto pastor and his wife were accused of defrauding more than 200 parishioners out of nearly $9 million under the ruse that they were generating above-average returns through dabbling in foreign-currency trading. Share on Twitter Twitter The functioning of a Ponzi scheme is inherently simple. Todays order brings to an end the criminal proceedings against Mr. Wannakuwatte, who operated the largest Ponzi scheme in Sacramento history, said U.S. Attorney Wagner. However, while IMG and RelyAid did have a business relationship with the USVA, authorities alleged that this relationship was grossly overstated. The rebranded Las Vegas Neon went defunct almost immediately after his arrest. - Dont believe everything youre told. Wannakuwatte has filed for bankruptcy protection. No Thanks ) or https:// means youve safely connected to the .gov website. 2023 InvestorPlace Media, LLC. Wannakuwatte filed court papers this week saying the loss was really somewhere between $50 million and $80 million. As part of his plea agreement, Wannakuwatte will file for bankruptcy protection and forfeit more than $330,000 in bank accounts to the government, along with 16 pieces of property, including his South Land Park house and vacation homes in Hawaii, Oregon and Sonoma County. The defendant offered up an apology, read aloud by his lawyer, and accepted his prison sentence in silence. Even when excluding the three largest Ponzi schemes, the average scheme size was still $43.3 million. Daniel Parrili, John Lauer, and Christopher Anderson met in a Wisconsin prison where, unsurprisingly, they were currently serving time for fraud-related charges. This case should serve as a warning to those thinking of committing fraud., FDIC OIG Special Agent in Charge Wade V. Walters stated, The sentencing of Mr. Wannakuwatte today reflects fitting punishment for a fraud scheme that victimized so many trusting individuals, businesses, government agencies, financial institutions, and others. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt. Even after the trio accepted guilty pleas from state prosecutors, Steven Palladino recently landed in more trouble when federal prosecutors indicted him on 25 charges of criminal contempt. The Government filed an opposition. One Florida man went a bit too far in relying on the heavens for riches. at 4.) Wagner said its still operating, although at a far lower volume than what Wannakuwatte had represented to investors. The judge called him a liar and his victims labeled him a cheater and a sociopath. Florida authorities arrested four people and charged them with orchestrating a $70 million Ponzi scheme that promised hefty returns to investors who thought their returns were coming from an investment in a virtual concierge machine. Fri, Aug 12 2016 4:30 PM EDT. See U.S.S.G. This case should serve as a warning to those thinking of committing fraud., FDIC OIG Special Agent in Charge Wade V. Walters stated, The sentencing of Mr. Wannakuwatte today reflects fitting punishment for a fraud scheme that victimized so many trusting individuals, businesses, government agencies, financial institutions, and others. Wannakuwatte pleaded guilty unusually early in the process. (Id. Defendant requests the Court reduce his term of imprisonment due to the COVID-19 pandemic. We found 1 criminal records from the federal database for Deepal Wannakuwatte. In total, the venture raised over $10 million from at least 40 investors. Deepal Wannakuwatte, owner of the Las Vegas Neon, was arrested February 20 in Sacramento, Calif., on federal fraud charges, and the Neon folded on Wednesday, according to league officials at. in Tampa, Fla. A New York man was accused of using his position as head of a soccer club to dupe investors out of more than $5 million in a Ponzi scheme that purportedly financed the sale of cigarettes to a Native American Indian reservation. In addition to fulfilling their divine duties, Mr. Hibbert told parishioners he could generate monthly returns of up to 8.5% through his skills as a foreign currency trader. 2:14-cr-00067-TLN (E.D. While Sundown did actually engage in comic book production, the resulting revenues were not nearly enough to make the promised returns to investors. Promptly, on the next day, the pending motions to set aside the defaults were filed. According to court documents, from 2002 to 2014, Wannakuwatte convinced nearly 200 victims, including individuals, corporate entities, and financial institutions, to invest in a number of business opportunities by misrepresenting the financial worth of himself and his companies. Get FBI email alerts Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. Investors were told that their VCM would be placed in a business where it could generate lucrative profits that allowed the payout of annual returns of 80% to 120%. American Bar Association According to court documents, from 2002 to 2014, Wannakuwatte convinced nearly 200 victims, including individuals, corporate entities, and financial institutions, to invest in a number of business opportunities by misrepresenting the financial worth of himself and his companies. . As to his conditions of confinement, Defendant has not shown he is unable to manage his health conditions and minimize his risks through self-care. The Court is mindful that people with certain medical conditions, including hypertension, can be more vulnerable to COVID-19. The Sacramento, California businessman operated a $230 million medical glove Ponzi scheme. This equates to roughly $6.3 billion per year of investor wealth lost to Ponzi schemes or nearly the annual GDP of Africas Republic of Niger. Id. Put another way, a Ponzi scheme was uncovered, on average, once every four days from 2008 to 2013. In addition to the prison term, United States District Judge Troy L. Nunley ordered Wannakuwatte to forfeit multiple properties, vehicles, business interests, and bank accounts to be used to provide restitution to victims. Deepal Wannakuwatte seemed prepared, barely a week ago, to accept a lengthy prison term for orchestrating one of the biggest Ponzi schemes in Sacramento history. We are pleased to have played a part in bringing Mr. Wannakuwatte to justice and value our cooperative working relationships with the U.S. Attorney's Office, FBI, and IRS-CI.. Gurudeo Buddy Persaud, 47, was arrested and charged with operating a Ponzi scheme that promised risk-free returns derived from investing in the futures markets and other markets. Prosecutors have said the net loss to investors came to $109 million. When Hoopers mother died four years ago, Wannakuwatte attended the funeral. Charles Ponzi would eventually serve nearly two decades in federal and state prison for that and related scams, but little did he know that his surname would one day epitomize one of the most potent weapons of financial destruction ever encountered. Susi Emu Farms took on the obligation of raising the emu, and investors were told that the returns were possible because of the alleged value in emu meat and oil. Share sensitive information only on official, secure websites. Under his original indictment, Wannakuwatte could have received up to 90 years in prison. According to court documents, from 2002 to 2014, Wannakuwatte convinced nearly 200 victims, including individuals, corporate entities, and financial institutions, to invest in a number of business opportunities by misrepresenting the financial worth of himself and his companies. In what is believed to be a first, criminal charges were brought against a Massachusetts husband, wife and son based on charges the trio operated a Ponzi scheme that duped investors out of at least $10 million. After his arrest, the World TeamTennis league revoked his franchise and disbanded the team. Wannakuwatte ran a Ponzi scheme in California through his company, International Manufacturing Groupone where money from new investors goes to interest payments from older investorsfor nearly a decade before the scam imploded in 2014. In sentencing Wannakuwatte, Judge Nunley told the defendant, You embody true evil. He claimed the funds obtained through the line of credit would be used to improve a glove manufacturing facility he owned in Olivehurst. Persaud was a registered representative with a Florida broker-dealer. In addition to criminal charges, Joseph Signore and Paul Schumack also are facing civil fraud charges filed by the Securities and Exchange Commission. Email Email. Indeed, while Madoff involved several thousand investors, the court-appointed receiver in ZeekRewards announced that he had received proof of claim forms from over 174,000 victims. In California, a former tennis team owner was arrested earlier this year and charged with defrauding investors out of at least $125 million through his medical equipment businesses, International Manufacturing Group (IMG) and RelyAid. We are committed to aggressively pursue those who attempt to circumvent the law for personal gain., This case shows that the appearance of success can mask a tangled financial web of lies, said Acting Special Agent in Charge Thomas McMahon, IRS-Criminal Investigation. "It's imperative that people do background checks on any kind of person they are going to do business with," said David Schassler, a licensed private investigator in New . Prosecutors say Wannakuwatte conned his victims into investing in a West Sacramento medical supply company whose revenue was just a fraction of what he claimed. To date, prosecutors have obtained at least 14 convictions including a guilty plea from Madoffs brother, Peter Madoff. At times, Wanakuwatte set up fake conference calls between himself, a potential investor, and someone he falsely claimed was a VA representative. It's time to renew your membership and keep access to free CLE, valuable publications and more. But on the heels of a joint investigation with the Internal Revenue Service-Criminal Investigation (IRS-CI) and the Department of Veterans Affairs Office of Inspector General (VA-OIG), Wannakuwattewho pled guilty last yeargot his comeuppance: He was ordered by a federal judge last month to pay millions in restitution to his victims. Deepal Wannakuwatte, the former owner of the now-defunct Sacramento Capitals professional tennis team, was sentenced to 20 years in prison Thursday for perpetrating one of the costliest Ponzi schemes in the regions history. A thief, a serial thief. In February 2015, he was ordered to forfeit more than $3 million worth of real estate, vehicles, interests in financial accounts, cash, and business interests. 95814, Telephone:(916) 554-2700 He is scheduled to be arraigned on March 21, 2014. Wannakuwatte, who turns 64 next week, has been in jail since February on charges of taking banks and individual investors for more than $100 million. The final chapter in the case came to a close on March 5, 2015, when the judge ordered that Wannakuwatte pay a total of $108,199,452.63 in restitution. Contrary to his representations, Wannakuwatte used much of the money he obtained to pay himself and his family, make lulling payments to participants in his fraudulent investment schemes, and pay outstanding debts unrelated to his false representations. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA. He pleaded guilty to a count of wire fraud in May. 1B1.13, cmt. This ruling concludes the federal criminal prosecution; civil proceedings in the United States Bankruptcy Court are ongoing. (ECF No. In exchange for their investment, Rocco promised investors annual returns ranging from 15% to 18%. You are a liar, a serial liar. This ruling concludes the federal criminal prosecution; civil proceedings in the United States Bankruptcy Court are ongoing. [3] See also [ edit] Tennis portal Over twelve years (2002 to 2014), Wannakuwatte convinced several investors that their money was financing RelyAid Global Healthcare, a manufacturer of latex medical gloves which Wannakuwatte claimed had $125 million worth of contracts with the U.S. Department of Veterans Affairs. Viking Financial Group (Viking) was owned and operated by Steven Palladino, his wife Lori Palladino, and his son, Greg Palladino. Todays sentencing represents the severity of the fraud committed by Wannakuwatte and those he hurt the most: the victims who fell prey to the massive fraud scheme. Share on Twitter Twitter Wannakuwatte was born in Sri Lanka and moved to Georgia to play tennis in college. An official website of the United States government. For more than decade, up until February 2014, Sacramento businessman (and Ponzi scammer extraordinaire) Deepal Wannakuwatte fooled his investors and his lenders into believing that he and his companies were worthy of their trust and their money. Wannakuwatte told his victims he had $100 million worth of contracts to supply latex gloves to veterans hospitals, when in fact the contracts totaled just $25,000 a year. Invest Your Money Wisely: Tips for Consumers. The total losses to investor victims exceeds $100 million. Persaud was able to raise at least $1 million from investors. In 2013, Wannakuwatte claimed to have more than $125 million in VA contracts alone. The total losses to investor victims exceeds $100 million. We thank the IRS Criminal Investigation and FDIC Office of Inspector General for their partnership throughout this investigation. (ECF No. The case is tied to his medical-supply business, International Manufacturing Group. Perhaps unsurprisingly, the overwhelming majority of Ponzi scheme perpetrators were males over 90%, to be exact. Indeed, authorities alleged that Rocco even used his position as club president to withdraw nearly $67,000 from the clubs bank accounts a move that nearly depleted club coffers if not for the generosity of club benefactors to cover the shortfalls. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s). In his highprofile pursuit for prestige and financial gain, Wannakuwatte had no regard for public trust and the financial stability of his victims, said Special Agent in Charge Monica M. Miller of the Sacramento Division of the Federal Bureau of Investigation. During that time frame, he fraudulently obtained in excess of $230 million from more than 150 victims, including individuals, businesses, government agencies, and financial institutions. Therefore, the Court need not address whether Defendant is a danger to the community or the 18 U.S.C. n. 1(A). His firm, Madoff Investment Securities LLC, offered consistent annual returns averaging 10% through a purported strategy that combined the purchase of blue-chip equities and corresponding options. Later, Wannakuwatte stood silently as defense attorney Philip Cozens read a letter from his client in which Wannakuwatte apologized to his victims and said he had shamed his family and his Sri Lankan roots. For individual investors, Wanakuwatte had encouraged them to obtain their investment money from the equity in their homes or from their retirement accountsas a result, many lost everything. The impact on the victims in this case was often devastating. For its part, the Government correctly notes that the presentencing report ("PSR") indicates Defendant underwent full knee replacement in 2012 and injured his left wrist in May 2014, but otherwise indicates Defendant is in good health. D & A INTERNATIONAL IMPORT . Call The Bees Dale Kasler, (916) 321-1066. At least 385 of the perpetrators were sent to prison, with a total of nearly 5,000 years of cumulative prison sentences handed down. The video promised that the VCMs would generate income for years, and promised that a $3,500 investment could produce huge returns. The alleged mastermind, Joseph Signore, is also accused of soliciting investors via emails that included a Bible passage intended to create a false sense of security and appeal to the religious beliefs of investors. An investigation began after a tip from an investor in 2013 and involved a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service, and the Federal Deposit Insurance Corporation, Office of the Inspector General. Copyright 2015, American Bar Association. However, the reality was that Persaud did not invest in futures markets; instead, his trading strategies were based on lunar cycles and the gravitational pull between Earth and the moon. An official website of the United States government. In return, those affiliates were handsomely rewarded with daily returns of 1.5%. The sentence imposed today is tantamount to a life sentence, although no amount of prison time will undo the harm he caused to so many victims. These individuals collectively are associated with 20 companies in 10 cities.