San Diego, California - A indictment unsealed Tuesday charges San Diego resident Denny Bhakta 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 (collectively “Fusion”). 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 indictment alleges that Bhakta provided investors with fabricated documents, including bank records that purported to show payments from Fusion to Hilton and fake agreements between Fusion and United Airlines. These documents gave the false appearance that Fusion bought large blocks of hotel rooms from Hilton and sold them to United Airlines. According to statements made in court, Bhakta laundered the proceeds of his fraud scheme by using investor funds from Fusion’s bank accounts at various casinos, including the ARIA Resort & Casino and The Cosmopolitan of Las Vegas.
Bhakta was arrested at his San Diego residence on Tuesday morning.
“We will do everything we can to protect investors and to seek justice when they fall victim to scammers,” said Acting U.S. Attorney Randy Grossman. “Investors, be suspicious of high-pressure sales tactics, promises of returns that are too good to be true, and always verify the license and legitimacy of the person making the pitch.” Grossman thanked the prosecution team and the FBI for their excellent work on this case.
“The defendant allegedly spent the last five years making millions of dollars based on false promises supported by fraudulent financial statements and fake business agreements,” said FBI Special Agent in Charge Suzanne Turner. “This case should serve as a warning – the FBI will continue to partner with the U. S. Securities and Exchange Commission to root out all forms of investment fraud.”
The next hearing is scheduled for January 21 at 1:30 p.m.
DEFENDANT Case Number 21-CR-3352-JLS
Denny Bhakta Age: 39 San Diego, CA
SUMMARY OF CHARGES
Securities Fraud – Title 15, U.S.C., Sections 78j(b), 78ff, and Title 17, C.F.R., Section 240.10b-5
Money Laundering – Title 18, U.S.C., Section 1957
Maximum penalty: Twenty years in prison
AGENCY
Federal Bureau of Investigation
Securities and Exchange Commission
*The charges and allegations contained in an indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.