A San Diego man who ran a fraud scheme that took millions from investors — many of whom were his family and friends — while also taking millions in ill-gotten pandemic loan funds was sentenced Friday to nearly two decades in prison.
Denny Bhakta was convicted by a San Diego federal jury of more than two dozen securities fraud, bank fraud and money laundering counts for schemes that bilked relatives, close friends and governmental institutions out of millions over the course of several years. Bhakta was sentenced to 235 months in prison.
He was initially charged with soliciting investments for his companies, Fusion Hotel Management LLC and Fusion Hospitality Corp., then using investors’ funds on personal expenses and to pay off other investors, according to the U.S. Attorney’s Office. Those personal uses of the investor funds included buying expensive vehicles and going on exorbitant gambling sprees, with prosecutors describing one instance of Bhakta losing $1 million at a Las Vegas casino in less than eight hours.
Prosecutors said investors were told Bhakta’s companies would purchase discounted blocks of hotel rooms from Hilton, then sell those rooms for a profit to United Airlines and other companies.
Bhakta provided fabricated bank records and fake agreements with Hilton and United Airlines to make Fusion’s purported business dealings appear legitimate, according to prosecutors, who said Bhakta took around $35 million from investors, including his uncle, who lost $4.5 million.
Two years after the investment fraud charges were filed, federal prosecutors charged Bhakta in connection with 18 Paycheck Protection Program loans he applied for, totaling $4.4 million.
Prosecutors allege Bhakta misrepresented his businesses’ payroll expenses, number of employees and how the money would be used. He also used some of the investment fraud victims’ names to claim they were Fusion employees in order to secure the loans, prosecutors said.
