San Diego Man Convicted of Investment, Pandemic Loan Fraud Schemes

A San Diego man accused of running an investment fraud scheme and taking millions in pandemic loan funds was convicted by a federal jury this week of more than two dozen counts of securities fraud, bank fraud and money laundering.

Denny Bhakta, 42, was accused of first soliciting investments for his companies, Fusion Hotel Management LLC and Fusion Hospitality Corp., then using the investors’ funds for personal expenses, such as gambling and buying of vehicles, and to pay other investors, according to the US Attorney’s Office.

Prosecutors said investors were told Bhakta’s companies would buy blocks of discounted hotel rooms from Hilton, then sell those rooms for a profit to United Airlines and other companies.

Bhakta provided fabricated bank records and false agreements with Hilton and United Airlines to make Fusion’s alleged businesses appear legitimate, according to prosecutors, who said Bhakta took about $35 million from investors.

Victims of the investment fraud included Bhakta’s uncle, who lost $4.5 million, as well as Bhakta’s friends and other family members.

“This sophisticated scheme came to light after multiple victims came forward and disclosed the fraud,” San Diego U.S. Attorney Tara McGrath said in a statement. “Many of the victims are people who represent the best of us — honest, hard-working Americans who made investments based on a relationship of trust.”

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 business’ payroll expenses, the number of employees and how the money would be used. He also used some of the names of the victims of the investment fraud to claim they were employees of Fusion to guarantee the loans, prosecutors said.

Bhakta, who also faces a civil action from the US Securities and Exchange Commission, is due to be sentenced in January.