A San Diego resident is now implicated in further allegations after being accused of committing fraud against investors in his companies. He allegedly obtained $4 million illegally in COVID-19 related loans, according to the U.S. Attorney Andrew Haden’s office.
The 41-year-old man, Denny Bhakta, was taken to federal court last Friday to be arraigned on new charges pertaining to Paycheck Protection Program (PPP) loan fraud. Despite the charges, Bhakta entered a plea of not guilty, as per court records.
In December 2021, Bhakta was first indicted for allegedly exacting a fraud scheme through his managed companies that deceived investors out of $28 million from 2016 onwards. These companies included Fusion Hotel Management, LLC and Fusion Hospitality Corporation.
As per the original indictment, Bhakta purportedly informed investors that Fusion frequently purchased hotel rooms from Hilton at a discounted rate, which were then sold to United Airlines at a higher price to make a substantial profit.
Contrary to these claims, the funds were allegedly misdirected towards personal expenses and payouts to other investors, according to the court documents.
A grand jury added extra charges in a superseding indictment, based on accusations that Bhakta submitted fraudulent information to receive at least 18 PPP loans for several entities he managed.
The indictment reveals these dishonest claims included misrepresentation of the number of employees and average monthly payroll expense of these entities, his business ownership, and the intended usage of the PPP loan funding.
The aim of the Paycheck Protection Program, established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, was to support small businesses in maintaining operations and staff salaries throughout the pandemic period.
However, Bhakta is accused in the superseding indictment of misusing these received PPP funds, rather than utilizing them for their intended purpose despite the initial application’s pretense.
Allegedly, Bhakta used these funds to pay off credit card bills, meet significant casino expenses, and make cash withdrawals. The indictment suggests some of these funds were also used to propagate an investment fraud scheme.
“The Paycheck Protection Program offered critical help to numerous businesses aiming to survive during the pandemic.” says Acting U.S. Attorney Andrew R. Haden. “We will hold anyone accountable who took advantage of this crucial program.”
Bhakta now faces charges including securities fraud, bank fraud, and money laundering. The maximum penalty upon conviction stands at 30 years in prison. A status hearing for the case is scheduled for 1:30 p.m. on September 8.
### Frequently Asked Questions :
**Who is Denny Bhakta?**
Denny Bhakta is a 41-year-old man from San Diego who is accused of defrauding investors out of $28 million through his companies Fusion Hotel Management, LLC and Fusion Hospitality Corporation. He is also accused of obtaining $4 million illegally in COVID-related loans.
**What is the alleged fraud scheme related to the Paycheck Protection Program (PPP)?**
The charges are based on allegations that Bhakta claimed false information when applying for at least 18 PPP loans for several different entities, including misrepresentation regarding the number of employees, average monthly payroll expense, his business ownership, and how the PPP loan funds would be utilized.
**What are the potential consequences for Bhakta if found guilty?**
If convicted, Bhakta is looking at charges of securities fraud, bank fraud, and money laundering. The maximum penalty is a 30-year prison sentence.
