A Sacramento businessman and owner of the city’s former World TeamTennis franchise has been arrested in a federal fraud case.
Deepal Wannakuwatte was named in a criminal complaint filed in U.S. District Court in Sacramento and was arrested Thursday evening. He was being held at the Sacramento County Main Jail.
Wannakuwatte, a 63-year-old native of Sri Lanka, made his initial appearance in court this afternoon before U.S. Magistrate Judge Carolyn K. Delaney, who advised him of the charges against him and his legal rights. She set a bail hearing for next Thursday and ordered that he remain in custody until then.
Assistant U.S. Attorney Michael Beckwith is asking that Wannakuwatte be held without bail.
He is represented by prominent Sacramento criminal defense lawyer Donald Heller, who declined comment after the hearing on behalf of himself and Wannakuwatte’s wife and daughter, both of whom attended the hearing.
The case involves Wannakuwatte’s medical supply business, International Manufacturing Group, and doesn’t appear to be related to his ownership of the Sacramento Capitals. The tennis team announced earlier this month it had moved to Las Vegas after 28 years in Sacramento. A spokeswoman for the league couldn’t be reached for comment, and a spokeswoman for the team in Las Vegas said she had no knowledge of the arrest.
According to an arrest warrant filed by FBI Agent Paul Artley, the 63-year-old Wannakuwatte has been under investigation since September by the FBI, the Internal Revenue Service, the Department of Veterans Affairs and the Federal Deposit Insurance Corp.
The warrant says investigators have been looking into Wannakuwatte’s alleged role in a scheme involving International Manufacturing’s dealings with the Department of Veterans Affairs.
According to the warrant, an investor gave Wannakuwatte $500,000 several years ago and got a $5,000 payment from Wannakuwatte last week. “This appears to be a lulling payment made in connection with an ongoing fraud scheme,” the FBI agent wrote.
Sammy Cemo, a commercial real estate executive in Sacramento and a partner with Wannakuwatte in the medical supply business, was stunned to hear of the arrest.
“Holy cow, holy cow,” Cemo said. “I’m really surprised, I don’t know what to tell you.”
According to Cemo’s website, the medical supply business does more than $80 million in annual sales.
Meanwhile, a federal judge Wednesday awarded control of a $3 million private airplane be transferred to GE Capital from Wannakuwatte.
Wannakuwatte isn’t the first owner of the Capitals tennis team to run into legal problems. In 2010, the team’s box office receipts were confiscated to satisfy a court judgment against the team and former owner Lonnie Nielson, who later pleaded guilty to grand theft charges. Wannakuwatte became involved in the Capitals after another former owner, Bob Cook, filed for personal bankruptcy protection in 2011.