Deepal Wannakuwatte, the former tennis team owner who ran one of the biggest Ponzi schemes in Sacramento history, has filed for bankruptcy protection and listed a staggering $134 million in debt.
Nearly half the debt is owed to just three people, two of them from Sacramento.
Wannakuwatte’s Chapter 11 filing, in U.S. Bankruptcy Court in Sacramento, underscores predictions by federal prosecutors after he pleaded guilty to wire fraud last month: His victims almost certainly won’t be made whole. The disgraced businessman listed just $15.9 million in assets, mostly real estate.
Wannakuwatte, 63, who owned the now-defunct Sacramento Capitals tennis team, is expected to receive a 20-year prison term when he’s sentenced on July 24. He has been held without bail since his arrest in late February. His bankruptcy papers list his address as 651 I St., where the county jail is located.
The bankruptcy filing was part of his plea bargain with federal prosecutors. He agreed to forfeit his real estate and bank accounts in order to expedite the distribution of funds to his creditors. Wannakuwatte also agreed to surrender $8 million to $12 million worth of pending federal income tax refunds, although those weren’t listed among his assets in the bankruptcy filing.
Separately, Wannakuwatte’s daughter Sarah also filed for bankruptcy protection last week.
U.S. Attorney Benjamin Wagner said last month that the Wannakuwatte case is “very possibly” the largest Ponzi scheme in the region’s history.
Prosecutors said Wannakuwatte conned investors and banks to loan money to his West Sacramento medical-supply business, International Manufacturing Group, by claiming he had $100 million worth of contracts to sell latex gloves to veterans hospitals. In fact, his hospital contracts came to just $25,000 a year.
According to the bankruptcy papers, Wannakuwatte tapped three individuals for a combined $60 million in loans: Ron Ashley of San Rafael, $21.7 million; homebuilding executive Jack Sweigart of Sacramento, $19.9 million; and Byron Younger of Sacramento, $19 million. Neither Sacramento resident could be reached for comment Tuesday.
His fourth-largest creditor is a charitable foundation led by Sacramento real estate executive Sammy Cemo, who is already suing Wannakuwatte for $7.1 million.
Most of his creditors live in the Sacramento area, although some live as far away as Georgia.
In his bankruptcy filing, Wannakuwatte said he earned $180,000 each of the past two years and $30,000 so far this year. He was given permission to pay the $1,213 in court filing fees in four monthly installments.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.