Denny Bhakta, who was an ex-Hilton San Diego Bayfront revenue manager, was arrested on Tuesday after allegedly defrauding investors of around $28 million. As the FBI reports, the San Diego man used a discount scheme involving bogus hotel room blocks and laundered the money through well-known casinos in Las Vegas, such as The Cosmopolitan and ARIA, the Department of Justice states in a press release.
The Pitch Promised Massive Returns to Investors
Just like any scam offer that is too good to be true, Bhakta offered massive returns on a venture in which discounted hotel rooms were bought and then they were re-sold to airline companies for a much higher price.
He even told one investor that he was missing $120,000 to complete a massive $2.7 million deal at Hilton, located at Chicago’s O’Hare Airport, as the affidavit states. The affidavit went on to say that the profit per room was $40, and there were a total of 30,000 rooms, which were pre-sold to United. According to the documents, Bhakta guaranteed a 10% return to its investors.
As prosecutors state, he began his scam journey in 2016 and managed to convince investors to put money into Fusion Hospitality Corporation and Fusion Hotel Management, his sham companies. To make matters more convincing, Bhakta used numerous fake documents, including bank records that showed payments made from Fusion to Hilton, as well as fake Fusion-United Airlines agreements. Moreover, Bhakta argued that his mentor is now at the “top of the food chain” at United Airlines.
A separate complaint by the US Securities & Exchange Commission argues that the payments to investors were classic Ponzi scheme transactions as payments were made with investors’ money and Fusion had almost no business activity.
Bhakta Wired Almost $2 Million in Just Three Days Back in 2018
In June 2018, Bhakta wired a total of $1.7 million to an unknown casino, as per SEC’s filed reports. The DOJ charged him with money laundering. However, the money from the investors was clean right until the moment they were transferred to the casino and it remains unknown how the transactions concealed the crime.
In the SEC complaint, the phrase “money laundering” is avoided and instead, it is just stated that the money was used for gambling purposes. Suzanne Turner, FBI Special Agent in Charge, stated that this case will be a warning to all those who intend to participate in these types of activities and noted that the FBI will work with the SEC to make sure that investment fraud is rooted out.
As for United and Hilton, these two companies were contacted, but they denied having any affiliation with Bhakta or his companies. Moreover, at least one family member of Bhakta was an investor and several people took him to court to regain some of their losses. A Superior Court in San Diego ordered Fusion and Bhakta to pay $5 million to a victim back in March 2020, but as the investor claims, the money is yet to be transferred.
Back in September, reality TV star Maurice Fayne was also charged with fraud after illegally depositing around $5 million to Choctaw Casino and Resort.