By SDCN Editor
San Diego, CA–A San Diego man was arraigned in federal court on August 11 on additional charges that he fraudulently obtained $4 million in Paycheck Protection Program loans through several entities he managed and controlled.
Denny Bhakta, 41 was first indicted in December 2021 for defrauding investors in his companies; a grand jury returned a superseding indictment this week that includes additional charges.
Bhakta was originally charged with securities fraud and money laundering for running an investment fraud scheme that took in at least $28 million from investors since 2016. According to court documents and statements made in court, Bhakta solicited investments in his companies, Fusion Hotel Management, LLC and Fusion Hospitality Corporation. Bhakta falsely told investors that Fusion routinely acquired discounted blocks of hotel rooms from Hilton, which Fusion then sold to United Airlines at a higher price for a significant profit. Instead of buying blocks of hotel rooms with investors’ funds, however, Bhakta used the money for personal expenses and to make payments to other investors.
The Coronavirus Aid, Relief, and Economic Security Act was enacted to provide emergency financial assistance to Americans suffering economic harm as a result of the COVID-19 pandemic. The CARES Act established the Paycheck Protection Program known as PPP, under which banks would make forgivable loans to small businesses so that those businesses could keep their doors open and employees on their payroll. If a business used the money for payroll and other eligible business expenses, the loans would be forgiven, and the federal government’s Small Business Administration would pay back the bank.
If convicted, Bhakta could receive 30 years in prison.
