Deep Background
November 28, 2016

A case that led the FBI to warn, “do your due diligence when thinking about investing…”

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Some background checking might have unveiled a decade-long Ponzi scheme in California that defrauded almost 200 people and institutions.  In 2014, Deepal Wannakuwatte of Sacramento pled guilty to fraud and other crimes in a case involving $230 million he fraudulently obtained between 2002 and 2014, according to federal court documents and Justice Department news releases.  The businessman was sentenced to serve 20 years in prison and to pay more than $100 million in restitution.  He had told his victims that due to his status as a minority businessman, his highly successful latex-glove manufacturing firms had contracts worth $125 million annually with federal agencies such as the U.S. Department of Veterans Affairs.  His actual business was unprofitable, and did work for the V.A. amounting to only $25,000 a year.   He showed the investors phony corporate documents, and put them on the phone with an associate of his posing as a V.A. official.  Federal contracts of the size Wannakuwatte claimed are a matter of public record, and if they were real could have been confirmed online.  A 2015 public statement on the case by the FBI advised people to “do your due diligence when thinking about investing your hard-earned money…Take the time to do your own research on the investment’s potential — and on the person making the offer.”  CNBC’s American Greed show ran a report in August 2016 on Wannakuwatte’s con job, which the show called “a cautionary tale to consider any time you are asked to put down money now in hopes of a payoff down the road.”

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